]The Economy Heads for Normal: A quick look at the fundamentals affirms the hunch.

The Economy Heads for Normal

A look at the fundamentals affirms the hunch. 

 

    

The stock market may be up and down this year, but America’s economic recovery seems to be proceeding at a decent pace. Anyone who wants some evidence of that can find it in some key fundamental indicators.

 

Pessimists may counter: didn’t the economy grow just 0.1% in the first quarter? Indeed, that was the federal government’s initial estimate – but the initial estimate of quarterly GDP is twice revised, and often drastically so. Other key indicators point to a healthier economy, and some suggest that March and April were better than presumed.1

Jobless claims reached a 7-year low this month. They decreased to pre-recession levels at last, with a seasonally-adjusted 297,000 applications received in the week of May 3-10, the fewest in any week since May 2007. Economists Reuters polled thought 320,000 claims would appear.2

Hiring has picked up. April saw employers hire 288,000 people with gains in the manufacturing, construction, and professional/technical sectors. Even state and local governments hired.1

 

From November to April, non-farm payrolls grew by an average of 203,000 jobs per month. From January through April, the gain averaged 214,000 jobs per month. That is the kind of steady growth that pulls an economy out of the doldrums.1,3

 

Yes, the jobless rate hit a 5½-year low in April partly due to fewer jobseekers – but when fewer people look for work, it often translates to an indirect benefit for those in the hunt. That benefit is higher pay. Analysts think noticeable wage growth might be the next step in the labor market recovery.1

So has consumer spending. With a 0.9% increase (0.7% in inflation-adjusted terms), March was the strongest month for personal spending since August 2009. While the gain on April retail sales was just 0.1%, the March advance was just revised up to 1.5%, representing the best month for retail purchases in four years.3,4

 

The sequester is in the rear-view mirror. Major federal spending cuts probably exerted a significant drag on the economy in 2013. In 2014, they are gone.

The manufacturing & service sectors keep growing. The Institute for Supply Management’s globally respected monthly PMIs monitor these sectors. ISM recorded economic activity in the U.S. manufacturing sector expanding for an eleventh straight month in April; its service sector index has recorded growth for 51 straight months.5,6

 

Inflation is normalizing. In the big picture, inflation is not necessarily a negative. At the turn of the decade, our economy faced notable deflation risk. The euro area is still facing it today – as of April, consumer prices there had risen just 0.7% in a year. A return to moderate inflation is expected as the economy recovers. Interest rates should move higher, and in the long run, higher interest rates should lend a helping hand to the savings efforts of many households and the incomes of many retirees.7

Pending home sales went positive again in March. Before the 3.4% gain in that month, this leading indicator of housing market demand had been negative since last June. An increase in contracts to buy homes speaks to a pickup in residential real estate. The gain brought the National Association of Realtors’ pending home sales index to a reading of 97.4 in March, close to its origination (or “normal”) mark of 100.8

Some analysts think Q2 should bring solid expansion. Economists surveyed by MarketWatch expect GDP to hit 3.5% this quarter, and in the Wall Street Journal’s May poll of 48 economists, the consensus was for 3.3% growth in Q2.3,9

More inflation pressure, tightening by the Federal Reserve … how can that be good? In the short term, it will likely hamper the stock market and the housing market. In fact, the Mortgage Bankers Association has been tracking a reduction in demand for home loans, and that and any wavering in consumer spending may lead the Fed to ease a little longer or less gradually than planned (news Wall Street might welcome).7

   

Normal is good. Over the past several years, we have witnessed some extreme and aberrational times with regard to market behavior and monetary policy. A little equilibrium may not be so bad.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – mercurynews.com/business/ci_25684116/u-s-has-best-month-job-gains-two [5/2/14]

2 – reuters.com/article/2014/05/15/idUSLNSFGEAGK20140515 [5/15/14]

3 – marketwatch.com/story/sales-at-us-retailers-barely-rise-in-april-2014-05-13 [5/13/14]

4 – tinyurl.com/q88a338 [5/1/14]

5 – ism.ws/ISMReport/MfgROB.cfm [5/1/14]

6 – ism.ws/ISMReport/NonMfgROB.cfm [5/5/14]

7 – blogs.wsj.com/moneybeat/2014/04/30/macro-horizons-all-eyes-on-fed-but-central-banks-overseas-more-interesting/ [4/30/14]

8 – usnews.com/news/business/articles/2014/04/28/contracts-to-buy-us-homes-up-1st-time-since-june [4/28/14]

9 –  projects.wsj.com/econforecast/#ind=gdp&r=20 [5/14]

 

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Raytheon, ExxonMobil, Merck, Glaxosmithkline, Verizon,  Chevron, Qwest, Hughes, Northrop Grumman, Pfizer, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. The publisher is not engaged in rendering legal, accounting or other professional services. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Linda Bullwinkle is a Representative with FSC Securities and maybe reached at http://www.theretirementgroup.com.

 

 

Should You Put Your Home Into a Trust?

 Uncommon, or uncommonly wise? Occasionally, a couple or a family will elect to put their home into a revocable living trust, a charitable remainder trust (CRT) or a qualified personal residence trust (QPRT). There are advantages and disadvantages to doing this.

People make this move for a variety of reasons. They may want to save money on probate and reduce estate taxes. They may want a little more protection against “creditors and predators”. They may be looking for a way to gift real property to their adult children. They may want an orderly transfer of such property to a particular heir, free of interfamilial squabbles. By putting a house into a trust, they may accomplish some or all of these objectives.1,2

If much of your net worth is linked to the value of your home, you may be considering this. As the federal estate tax exemption is higher than it once was, placing your house into a trust may have slightly less merit today than it once did. There are significant potential benefits, however.

Putting your home into a revocable living trust. In this arrangement, the title to your house is transferred to the living trust during your lifetime. Besides being the grantor of the revocable living trust, you may also name yourself trustee and beneficiary. This gives you the power to a) add other real estate to the trust, b) gift or sell the real estate held within it while you are alive, c) unwind the trust and put the real property back in your estate within your lifetime.1,3

At your death, the trust becomes irrevocable. Control of the real property is then transferred to a named successor trustee, presumably one of your adult children.1

A revocable living trust may spare your home from probate and facilitate the transfer of title to your heirs. There may be some estate tax savings, and if you become incapacitated, another trustee can be chosen to manage the trust.1

Putting your home into an irrevocable living trust. The irrevocable variation offers you similar benefits, but the difference here is that you are giving up control – once you transfer real property into an irrevocable trust, it is out of your taxable estate and no longer yours. An independent third party trustee manages the trust on behalf of its beneficiaries. In this case, the transfer of real property is subject to gift tax because it is defined as a gift to the trust beneficiaries. Crummey withdrawal right letters may help in this regard – if they are sent to the beneficiaries, some of the amount of the gift may be shielded from such tax.4

Putting your home into a CRT. A charitable remainder trust is an irrevocable trust that helps an owner of a highly appreciated asset defer capital gains and income taxes and help a qualified charity. You make a gift of the real property to the CRT, which then sells it and arranges recurring income payments to you out of the managed sale proceeds. These payments last either for life or for a 20-year period. After you or your surviving spouse die, the charity receives the remainder of those sale proceeds.4,5

By donating real estate to a charity via a CRT, you accomplish four things: you take the real property out of your taxable estate, you get an income stream, you avoid recognition of capital gains on what is presumably a highly appreciated asset, and you can take an immediate income tax charitable deduction based on a portion of the property’s value.5

At first glance, it may seem like the charity is the “winner” here – not your heirs. To counter that, life insurance policies are frequently used. Trust assets may be used to purchase “cash value” life insurance, so that your heirs may one day receive tax-free insurance proceeds of equivalent or greater value than the donated asset.4,5

Putting your home into a QPRT. Qualified personal residence trusts allow you to gift your home to your children while you retain control of it for the term of the trust (typically 10 years). If your home seems poised to rise in value, the QPRT may lead to major estate and gift tax savings – it helps you transfer the home out of your taxable estate, thereby reducing its size. The value of the gift is the fair market value of the home minus “retained interest” (i.e., your right to keep living in it for X number of years, the value of which is derived from IRS calculations).2,6,7

You have to outlive the term of the QPRT and then either a) move out of your house or b) pay your heirs fair market rent to keep living in it. If that doesn’t happen, the trust will be rendered invalid and when you die, the full market value of your home will be counted in your taxable estate. QPRTs were introduced in 1990, when the federal estate tax exemption was only $600,000. As it is currently above $5 million, some estate planners feel these trusts are less necessary today.2,6,8

A last word. Even simple trusts invite complexity into your financial life. You must weigh whether the cost of trust creation and administration will be worth it. After you pass, the trust has to file tax returns and value assets, and the resulting expenses may compare to the money saved by keeping the home out of probate. A transfer-on-death deed (permitted in some states) or other estate planning tools may help you realize your goals more cheaply.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – homeguides.sfgate.com/advantages-disadvantages-putting-house-trust-42083.html [8/6/13]

2 – money.cnn.com/magazines/moneymag/money101/lesson21/index6.htm [8/6/13]

3 – nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter7-7.html [8/6/13]

4 – homeguides.sfgate.com/tax-advantages-creating-trust-real-estate-82243.html [8/6/13]

5 – bnaibrith.org/charitable-remainder-trust-crt.html [8/6/13]

6 – tinyurl.com/ktl8zlj [7/10/13]

7 – foxbusiness.com/personal-finance/2013/07/26/shielding-your-assets-from-estate-taxes/ [7/26/13]

8 – irs.gov/pub/irs-soi/89-90estxs.pdf [1990]

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Verizon, Qwest, Chevron, Hughes, Northrop Grumman, Pfizer, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services.All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Linda Bullwinkle is a Representative with FSC Securities and maybe reached at http://www.theretirementgroup.com.

 

THE 2 Biggest retirement misconceptions. While the idea of retirement has changed, certain financial assumptions haven’t.

THE 2 Biggest retirement misconceptions

 

While the idea of retirement has changed, certain financial assumptions haven’t.

 

We’ve all heard about the “new retirement”, the mix of work and play that many of us assume we will have in our lives one day. We do not expect “retirement” to be all leisure. While this is becoming a cultural assumption among baby boomers, it is interesting to see that certain financial assumptions haven’t really changed with the times.

In particular, there are two financial misconceptions that baby boomers can fall prey to – assumptions that could prove financially harmful for their future.

#1) Assuming retirement will last 10-15 years. Previous generations of Americans planned for retirements anticipated to last only 10-15 years. Today, both men and women who reach 65 can anticipate around 20 additional years of life. It’s important to note that this is just an average; a quarter of people reaching 65 will live beyond 90 and ten percent will live another five years or more.1

However, some of us may live much longer. The population of centenarians in the U.S. is growing – the Census Bureau counted 53,364 folks 100 years or older in 2010 and showed a steady 5.8 percent rise in centenarians since the previous count in 2000. It also notes that between 1980 and 2010 centenarians experienced a population boom, with a 65.8% rise in population, in comparison to 36.3% overall.2

If you’re reading this article, chances are you might be wealthy or at least “affluent.” And if you are, you likely have good health insurance and access to excellent health care. You may be poised to live longer because of these two factors. Given the landmark health care reforms of the Obama administration, we could see another boost in overall American longevity in the generation ahead.

Here’s the bottom line: every year, the possibility is increasing that your retirement could last 20 or 30 years … or longer. So assuming you’ll only need 10 or 15 years worth of retirement money could be a big mistake.

Many people don’t realize how much retirement money they may need. There is a relationship between Misconception #1 and Misconception #2 …

#2) Assuming too little risk. Our appetite for risk declines as we get older, and rightfully so. Yet there may be a danger in becoming too risk-averse.

Holding onto your retirement money is certainly important; so is your retirement income and quality of life. There are three financial issues that can affect your quality of life and/or income over time: taxes, health care costs and inflation. Over time, even 3-4% inflation gradually saps your purchasing power. Your dollar buys less and less.

Here’s a hypothetical challenge for you: for the rest of this year, you have to live on the income you earned in 1999. Could you manage that?

This is an extreme example, but that’s what can happen if your income doesn’t keep up with inflation – essentially, you end up living on yesterday’s money.

Taxes may be higher in the years ahead. So tax reduction and tax-advantaged investing have taken on even more importance whether you are 20, 40 or 60. Health care costs are climbing – we need to be prepared financially for the cost of acute, chronic and long-term care.

As you retire, you may assume that an extremely conservative approach to investing is mandatory. But given how long we may live – and how long retirement may last – growth investing is extremely important.

No one wants the “Rip Van Winkle” experience in retirement. No one should “wake up” 20 years from now only to find that the comfort of yesterday is gone. Retirees who retreat from growth investing may risk having this experience.

How are you envisioning retirement right now? Has your vision of retirement changed? Is retiring becoming more and more of a priority? Are you retired and looking to improve your finances? Regardless of where you’re at, it is vital to avoid the common misconceptions and proceed with clarity.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – http://www.socialsecurity.gov/planners/lifeexpectancy.htm [8/23/13]

2 –  http://www.census.gov/prod/cen2010/reports/c2010sr-03.pdf [12/12]

 

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice.  The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Northrop Grumman, Raytheon, Glaxosmithkline, Merck, Pfizer, Verizon, ExxonMobil, Hughes, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may
be reached at http://www.theretirementgroup.com.

 

Taking Advantage of the Provisions of Health Care Reform

Politics aside, how could coverage improve for you & your loved ones?

Taking Advantage of the Provisions of Health Care Reform

 

 Health care reform has many fans and many detractors. Amid all the sound and fury, the plain facts risk being blurred. So here is a look at where the reforms stand, and what they potentially offer you.

Here is how the health care exchanges will operate. According to healthcare.gov, open enrollment in the new health insurance exchanges is set to start on October 1; the open enrollment window for 2014 closes next March 31. Coverage you purchase via these exchanges becomes effective as soon as January 1, 2014. The federal government refers collectively to the 51 exchanges (one for each state and one for the District of Columbia) as the Health Insurance Marketplace. The federal government is running 34 of the 51 exchanges; others will be run by the respective state governments.1,2

When you visit the Health Insurance Marketplace online, you will be asked to fill out a form (with household size and income as key details) and then be presented with a roster of health insurance plans available in your area. You are also supposed to be notified if you qualify for lower out-of-pocket costs, or the federal Children’s Health Insurance Program or Medicaid.1

All plans offered through the exchanges will be from private insurers, and all of these plans will offer the same primary set of benefits. To make comparisons of price, benefits, and features easier, plans are slated to be presented in four categories – bronze, silver, gold, and platinum.1

Not all applicants will enroll online. Paper applications will also be provided starting October 1 (and for the record, may be downloaded). Applying by mail is possible; applying in person is possible with the assistance of a Navigator – a customer service representative for the HIM. The Navigators aren’t supposed to recommend this or that plan or plan option; they are to offer impartial guidance. Some states are requiring them to be insurance-licensed.1,2

The ACA is also inspiring private-sector imitators. Aon Hewitt has started its own private online health insurance marketplace for 2014, with more than 330,000 employees projected to enroll and 17 large U.S. companies already aboard.3

Here is how you benefit as a result of the reforms. Starting in 2014, insurers can’t cancel your policy due to an illness, and can’t put lifetime or annual dollar limits on payments for someone’s medical expenses. Young adults may stay on a parent’s health plan until age 26, whether they live at home or not. Also on track for change: No health plan will be able to turn down an adult or child applicant due to a preexisting medical condition or illness. Health plans will no longer be able to charge you for annual checkups and preventive care measures (such as cancer screenings and immunizations) in 2014. Health insurance premiums can no longer vary by gender.4,5

 

Medicare recipients will no longer have to pay out-of-pocket costs for common forms of preventative care such as vaccines, diabetes, cancer and cholesterol screenings and annual wellness checks. The infamous prescription drug “doughnut hole” may close altogether by 2020: while Medicare recipients got a 50% discount on brand name drugs and a 14% discount on generic drugs in 2012, those percentages will approach 75% by 2020.3,4,5

The federal government will effectively subsidize health insurance coverage for millions of lower-income Americans (about $5,000 per individual) in 2014 as they enroll in health plans through the HIM or buy coverage from health insurance companies selling individual and small group policies. The reforms could make as many as 17 million Americans Medicaid-eligible next year. In addition, more than $1.1 billion in rebates have been sent from insurance companies to consumers as a byproduct of the reforms.3,4

Here are the known problems & issues. As the Affordable Care Act represents an unprecedented revision to health insurance in America, there could be delays getting the HIM up and running by October 1. In addition, a tiny percentage of Americans will still be without health insurance. The requirement for larger employers to offer health insurance plans to their employees has been delayed until 2015.6

Here are things you should look out for in the future. Medicare Advantage plans will receive less and less money from the federal government due to the reforms: payments to Part C plans are going to shrink roughly $150 billion by 2022, so if you have Part C coverage, you will want to keep an eye on the plan premiums as they might gradually rise. It could be that the online health insurance exchanges produce a healthy competition that leads insurers to lower prices for coverage in the next few years; that remains to be seen. Not all states want to expand Medicaid; they can opt in or out.4,5

Try to avoid getting caught up in the sound and fury with health care reform; stay focused on what you can or cannot do with it.

  

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – healthcare.gov/what-is-the-health-insurance-marketplace/ [9/17/13]

2 – usatoday.com/story/news/nation/2013/09/09/obamacare-health-insurance-navigators-draw-scrutiny/2787239/ [9/9/13]

3 – forbes.com/sites/brucejapsen/2013/09/17/walgreen-joins-rush-to-employer-exchanges-an-alternative-to-obamacare-marketplace/ [9/17/13]

4 – consumerreports.org/health/resources/pdf/ncqa/The_Affordable_Care_Act-You_and_Your_Family.pdf [9/17/13]

5 – marketwatch.com/story/obamacare-explained-in-plain-english-2013-09-11 [9/11/13]

6 – finance.yahoo.com/news/q-impact-health-law-delay-businesses-211823119.html [7/3/13]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. This information should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, Raytheon, Pfizer, Glaxosmithkline, ING Retirement, AT&T, ExxonMobil, Northrop Grumman, Chevron, Bank of America, Merck, Qwest, Verizon,  Hughes, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

Getting It All Together for Retirement

 

  

Before retirement begins, gather what you need. Put as much documentation as you can in one place, for you and those you love. It could be a password-protected online vault; it could be a file cabinet; it could be a file folder. Regardless of what it is, by centralizing the location of important papers you are saving yourself from disorganization and headaches in the future.

 

What should go in the vault, cabinet or folder(s)? Crucial financial information and more. You will want to include…

 

Those quarterly/annual statements. Recentperformance paperwork forIRAs, 401(k)s, funds, brokerage accounts and so forth. Include the statements from the latest quarter and the statements from the end of the previous calendar year (that is, the last Q4 statement you received). You don’t get paper statements anymore? Print out the equivalent, or if you really want to minimize clutter, just print out the links to the online statements. (Someone is going to need your passwords, of course.) These documents can also become handy in figuring out a retirement income distribution strategy.

 

Healthcare benefit info. Are you enrolled in Medicare or a Medicare Advantage plan? Are you in a group health plan? Do you pay for your own health coverage? Own a long term care policy? Gather the policies together in your new retirement command center and include related literature so you can study their benefit summaries, coverage options, and rules and regulations. Contact info for insurers, HMOs, your doctor(s) and the insurance agent who sold you a particular policy should also go in here.

 

Life insurance info. Do you have a straight term insurance policy, no potential for cash value whatsoever? Keep a record of when the level premiums end. If you have a whole life policy, you want to keep paperwork communicating the death benefit, the present cash value in the policy and the required monthly premiums in your file.

 

Beneficiary designation forms. Few pre-retirees realize that beneficiary designations often take priority over requests made in a will when it comes to 401(k)s, 403(b)s and IRAs. Hopefully, you have retained copies of these forms. If not, you can request them from the account custodians and review the choices you have made. Are they choices you would still make today? By reviewing them in the company of a retirement planner or an attorney, you can gauge the tax efficiency of the eventual transfer of assets.1

 

Social Security basics. If you haven’t claimed benefits yet, put your Social Security card, last year’s W-2 form, certified copies of your birth certificate, marriage license or divorce papers in one place, and military discharge paperwork or and a copy of your W-2 form for last year (or Schedule SE and Schedule C plus 1040 form, if you work for yourself), and military discharge papers or proof of citizenship if applicable. Social Security no longer mails people paper statements tracking their accrued benefits, but e-statements are available via its website. Take a look at yours and print it out.2

 

Pension matters. Will you receive a bona fide pension in retirement? If so, you want to collect any special letters or bulletins from your employer. You want your Individual Benefit Statement telling you about the benefits you have earned and for which you may become eligible; you also want the Summary Plan Description and contact info for someone at the employee benefits department where you worked.

 

Real estate documents. Gather up your deed, mortgage docs, property tax statements and homeowner insurance policy. Also, make a list of the contents of your home and their estimated value – you may be away from your home more in retirement, so those items may be more vulnerable as a consequence.

 

Estate planning paperwork. Put copies of your estate plan and any trust paperwork within the collection, and of course a will. In case of a crisis of mind or body, your loved ones may need to find a durable power of attorney or health care directive, so include those documents if you have them and let them know where to find them.

 

Tax returns. Should you only keep last year’s 1040 and state return? How about those for the past 7 years? At the very least, you should have a copy of last year’s returns in this collection.

 

A list of your digital assets. We all have them now, and they are far from trivial – the contents of a cloud, a photo library, or a Facebook page may be vital to your image or your business. Passwords must be compiled too, of course.

  

This will take a little work, but you will be glad you did it someday. Consider this a Saturday morning or weekend project. It may lead to some discoveries and possibly prompt some alterations to your financial picture as you prepare for retirement.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – fpanet.org/ToolsResources/ArticlesBooksChecklists/Articles/Retirement/10EssentialDocumentsforRetirement/ [9/12/11]

2 – cbsnews.com/8301-505146_162-57573910/planning-for-retirement-take-inventory/ [3/18/13]

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Please consult your Financial Advisor for further information or call 800-900-5867. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. 

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, Northrop Grumman, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Glaxosmithkline,  Raytheon, ExxonMobil,  Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

Cash Flow Management

 

                       

You’ve probably heard the saying that “cash is king,” and whether you own a business or not, it is a truth that applies. Most discussions of business and personal “financial planning” involve tomorrow’s goals, but those goals may not be realized without attention to cash flow today.

 

Management of available cash flow is a key in any kind of financial planning. Ignore it, and you may inadvertently sabotage your efforts to grow your company or build personal wealth.

 

Cash flow statements are important for any small business. They can reveal so much to the owner(s) and/or CFO, because as they track inflows and outflows, they bring non-cash items and expenditures to light. They denote your sources and uses of cash, per month and per year. Income statements and P&L statements may provide inadequate clues about that, even though they help you forecast cash flow trends.

 

Cash flow statements can tell you what P&L statements won’t. Are you profitable, but cash-poor? If your company is growing by leaps and bounds, that can happen. Are you personally taking too much cash out of the business and unintentionally letting your growth company morph into a lifestyle company? Are your receivables getting out of hand? Is inventory growth a concern? If you’ve arranged a loan, how much is your principal payment each month and to what degree is that eating up cash in your business? How much money are you spending on capital equipment?

 

A good CFS tracks your operating, investing and financing activities. Hopefully, the sum of these activities results in a positive number at the bottom of the CFS. If not, the business may need to change to survive.

 

In what ways can a small business improve cash flow management? There are some fairly simple ways to do it, and your CFS can typically identify the factors that may be sapping your cash flow. You may find that your suppliers or vendors are too costly; maybe you can negotiate (or even barter) with them. Like many companies, you may find your cash flow surges during some quarters or seasons of the year and wanes during others. What steps could you take to improve it outside of the peak season or quarter?

What kind of recurring, predictable sales can your business generate? You might want to work on the art of continuity sales – turning your customers into something like subscribers to your services. Perhaps price points need adjusting. As for lingering receivables, swiftly preparing and delivering invoices tends to speed up cash collection. Another way to get clients to pay faster: offer a slight discount if they pay up, say, within a week (and/or a slight penalty to those that don’t). Think about asking for some cash up front, before you go to work for a client or customer (if you don’t do this already).

 

While the Small Business Association states that only about 10% of entrepreneurs draw entirely on their credit cards for startup capital, there is still a temptation for an owner of a new venture to go out and get a high-limit business credit card. It might be better to shop for one with cash back possibilities or business rewards in mind. If your business isn’t set up to receive credit card payments, consider it – the potential for added cash flow could render the processing fees utterly trivial.1

 

How can a household better its cash flow? One quick way to do it is to lessen or reduce your fixed expenses, specifically loan and rent payments. Another step is to impose a ceiling on your variable expenses (ranging from food to entertainment), and you may also save some money in separating some or all those expenses from credit card use. Refinancing – if you can do it – and downsizing can certainly help. There are many, many free cash flow statement tools online where you can track family inflows and outflows. (Your outflows may include bugaboos like long-term service contracts and installment payment plans.) Selling things you don’t want can make you money in the short term; converting a hobby into an income source or business venture could help in the long term.

 

Better cash flow boosts your potential to reach your financial goals. A positive cash flow can contribute to investment, compounding, savings – all the good things that tend to happen when you pay yourself first.

 

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – smallbusinesscomputing.com/tipsforsmallbusiness/5-tips-for-a-smoother-small-business-cash-flow.html [11/19/12]

 

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Raytheon, Hughes, Northrop Grumman, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Bank of America,Verizon,  Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Save for retirement consistently, regardless of how the market behaves.

There is seldom a dull moment on Wall Street. Stocks may rise or fall dramatically over the course of a year or a decade. Sometimes, breaking news may tempt you to pull money out of your 401(k) or greatly reduce your contributions. If you’re considering such a move, think twice.

 

Don’t stop saving for retirement. Even if you think you’re wealthy enough to forego putting money in your 401(k) for a while, you could end up seriously shortchanging your retirement savings potential by reducing your retirement plan balance or elective salary deferrals.

 

A 401(k) plan is a terrific retirement savings vehicle – but many Americans have not saved enough for their retirement years. On top of that, if you withdraw money from a 401(k) plan before age 59½, you’ll face a 10% tax penalty (with few exceptions) and you may end up spending money today that could have enjoyed tax-deferred compounding in the future.1

 

Don’t lose out on the power of tax deferral & compounding. Together, these factors have the potential to exponentially grow your retirement savings. As an example, let’s say you enroll in a 401(k) plan at age 25 and contribute $2,000 a year for 40 years with an annual return of 10%. At age 65, your $80,000 of contributions will be worth $973,684 thanks to compounding and a consistent inflow of new money.2

 

Contributions to a traditional 401(k) also reduce the amount of taxable income listed on your W-2 form. They may lower your initial tax hit on your state return as well; most states exempt traditional 401(k) contributions from tax. Self-employed individuals can actually deduct 401(k) plan contributions.2,3

 

The 2013 401(k) contribution limit is $17,500, with $5,500 in additional “catch-up” contributions permitted for workers 50 and older. These limits may rise slightly in 2014.4

 

Don’t lose out on a match. Will your employer match your contributions – say, a dollar-for-dollar match on the first 3% of salary? If you make $60,000 per year, 3% is $1,800. Would you throw away $1,800 worth of free money each year? You shouldn’t, especially given that this money will grow tax-deferred.

 

Do keep contributing steadily. It’s a good idea to keep up the dollar cost averaging and continue to make steady month-to-month or paycheck-to-paycheck salary deferrals. In all probability, this is central to your financial plan – and how will you amass the retirement savings you need if you stop contributing? Sure, there are other ways to build retirement savings, but dollar-cost-averaged contributions to a 401(k) represent a consistent, recurring way to get that job done.

 

If you contribute to your 401(k) plan through a dollar cost averaging approach, your investment dollar buys shares at a lower price in a bear market – and it also buys more shares for your money. So when a bull market cycle resumes, you may end up in a really good position.

It’s a good idea to keep contributing even if you are falling behind financially. Should you pay down debts with your 401(k) assets? Only as a last resort. In fact, if you are looking at a bankruptcy you should know that 401(k) assets are protected in Chapter 7 bankruptcies under federal law.5

 

Do review your goals with your financial advisor. Look at your time horizon. Look at your overall financial plan. Whether you are nearing retirement or far away from it, you will see that your 401(k) is a vital tool for pursuing your financial objectives. Whatever this or that website may proclaim, don’t be discouraged by short-term headlines; abide by the long-term plan created personally for you.

 

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Alcatel-Lucent, Chevron, Hughes, Glaxosmithkline, Northrop Grumman, Raytheon, ExxonMobil, Merck, Pfizer, Verizon, Bank of America, or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.


1 – irs.gov/taxtopics/tc424.html [4/1/13]

2 – womensfinance.com/wf/401k/taxes.asp [12/12]

3 – finance.zacks.com/tax-deductions-contributions-401k-plans-1852.html [10/15/13]

4 – irs.gov/uac/2013-Pension-Plan-Limitations [9/27/13]

5 – boston.com/business/personalfinance/managingyourmoney/archives/2010/05/bankruptcy_prot.html [5/17/10]

 

 

It Isn’t Too Late to Save for Retirement

 

  Some people start saving for retirement at 20, 25, or 30. Others start later, and while their accumulated assets will have fewer years of compounding to benefit from, that shouldn’t discourage them to the point of doing nothing.

 

If you need to play catch-up, here are some retirement savings principles to keep in mind. First of all, keep a positive outlook. Believe in the validity of your effort. Know that you are doing something good for yourself and your future, and keep at it.

 

Starting later means saving more – much more. That’s reality; that’s math. When you have 15 or 20 years until your envisioned retirement instead of 30 or 40, you’ve got to sock away money for retirement in comparatively greater proportions. The good news is that you won’t be retiring strictly on those contributions; in large part, you will be retiring on the earnings generated by that pool of invested assets.

 

How much more do you need to save? A ballpark example: Marisa, a pre-retiree, has zero retirement savings at age 45 and dedicates herself to doing something about it. She decides to save $500 each month for retirement. After 20 years of doing that month after month, and with her retirement account yielding 6% a year, Marisa winds up with about $225,000 at age 65.1

 

After 65, Marisa would probably realize about $10,000 a year in inflation-adjusted retirement income from that $225,000 in invested retirement savings. Would that and Social Security be enough? Probably not. Admittedly, this is better than nothing. Moreover, her retirement account(s) might average better than a 6% return across 20 years.1

 

The math doesn’t lie, and the message is clear: Marisa needs to save more than $6,000 a year for retirement. Practically speaking, that means she should also exploit vehicles which allow her to do that. In 2014, you can put up to $5,500 in an IRA, $6,500 if you are 50 or older – but you can sock away up to $17,500 next year in a 401(k), 403(b), Thrift Savings Plan and most 457 plans, which all have a maximum contribution limit of $23,000 for those 50 and older.2

 

If Marisa is self-employed (and a sole proprietor), she can establish a solo 401(k) or a SEP-IRA. The yearly contribution limits are much higher for these plans. If Marisa’s 2013 net earnings from self-employment (after earnings are reduced by one-half of self-employment tax) work out to $50,000, she can put an employer contribution of up to $10,000 in a SEP-IRA. (She must also make similar percentage contributions for all “covered” employees, excepting her spouse, under the SEP IRA plan.) As a sole proprietor, Marisa may also make a combined employer-employee contribution of up to $33,000 to a solo 401(k) this year, and if she combines a defined benefit plan with a solo 401(k), the limit rises to $47,400. If her 2013 net earnings from self-employment come out to $150,000, she can make an employer contribution of as much as $30,000 to a SEP-IRA, a combined employee salary deferral contribution and employer profit sharing contribution of up to $53,000 to a solo 401(k), and contribute up to $96,300 toward her retirement through via the combination of the solo 401(k) and defined benefit plan.3

 

How do you save more? As you are likely nearing your peak earnings years, it may be easier than you initially assume. One helpful step is to reduce some of the lifestyle costs you incur: cable TV, lease payments, and so forth. Reducing debt helps: every reduced credit card balance or paid-off loan frees up more cash. Selling things helps – a car, a boat, a house, collectibles. Whatever money they generate for you can be assigned to your retirement savings effort.

 

Consistency is more important than yield. When you get a late start on retirement saving, you naturally want solid returns on your investments every year – yet you shouldn’t become fixated on the return alone. A dogged pursuit of double-digit returns may expose you to considerable market risk (and the potential for big losses in a downturn). Diversification is always important, increasingly so when you can’t afford to lose a big portion of what you have saved. So is tax efficiency. You will also want to watch account fees.

 

If you start saving for retirement at 50, your retirement savings will likely double (at least) by age 65 thanks to consistent inflows of new money, decent yields and compounding.4

 

What if you amass a big nest egg & still face a shortfall? Maybe you can reduce expenses in retirement by moving to another city or state (or even another country). Maybe you can broaden your skill set and make yourself employable in another way (which also might help you before you reach traditional retirement age if you find yourself in a declining industry).

 

If you haven’t begun to save for retirement by your mid-40s, you have probably heard a few warnings and wake-up calls. Unless you are independently wealthy or anticipate being so someday, the truth of the matter is…

 

If you haven’t started saving for retirement, you need to do something to save your retirement.

 

That may sound harsh or scary, but without a nest egg, your vision of a comfortable future is in jeopardy. You can’t retire on hope and you don’t want to rely on Social Security, relatives or social services agencies for your well-being when you are elderly.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – money.cnn.com/2012/08/15/pf/expert/late-start-retirement.moneymag/ [8/15/13]

2 – irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$17,500-to-their-401%28k%29-plans-in-2014 [11/4/13]

3 – forbes.com/sites/ashleaebeling/2013/11/01/retirement-savings-for-the-self-employed/ [11/1/13]

4 – forbes.com/sites/mitchelltuchman/2013/11/21/financial-planning-for-late-starters-in-five-steps/ [11/21/13]

 

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. Please consult your Financial Advisor for further information or call 800-900-5867. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. 


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, ING Retirement, hewitt.com,  access.att.com, resources.hewitt.com,  AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

This 1990’s retirement planning principle seems questionable today.

Throwing Out the 4% Rule

 

In 1994, a financial advisor named Bill Bengen published research articulating the “4% rule”,which became a landmark of retirement planning.The 4% rule postulates that a retirement nest egg can last 30 years if a retireewithdraws 4% of it per year (incrementally adjusted for inflation), given a portfolio of 50% stocks and 50% bonds. Bengen studied numerous 30-year stock market time spans to arrive at his theory, which many retirement planners took as a guideline.1

Lately, the 4% rule has taken quite a bit of flak. At age 20, it looks less and less valid. Why? Two factors leap to mind.

The return of significant volatility. Bengen came up with the 4% rule during the 1982-2000 bull market, the greatest extended rally Wall Street has ever seen. Across that period, the S&P 500 rose 1153.94% (and 2041.47% with dividends reinvested). The S&P’s annual total return averaged 19.02% in that time frame. Back then, retirees and retirement planners harbored assumptions of double-digit annual returns, and withdrawing 4% a year from retirement savings seemed conservative.2

 

The bear markets of the 2000s were a rude awakening. Someone who retired in 1979 with a 50/50 mix of stocks and bonds in their portfolio would have enjoyed an average annual total return of 13.75% for the next 20 years – but a portfolio equally divided between stocks and bonds would have returned less than 4% in recent years, even in this current bull market. That brings us to the second factor.1   

 

Low yields from fixed-income investments. In 1990, the 10-year Treasury returned better than 8%. In 2012, it yielded around 2%. Many fixed-income investments have yielded less than that in recent years. If you are withdrawing 4% a year from your retirement savings and less than half your retirement portfolio is invested in equities, you are staring at a problem.3  

 

No retirement planner would urge retirees to put all their money in stocks – the volatility risk is just too great. Assigning half (or more) of a retirement portfolio to debt instruments, however, presents an undeniable opportunity cost. Consumer prices are rising only slightly, but interest rates remain in the vicinity of historic lows; retirees who want to keep ahead of inflation aren’t making much progress by investing substantially in bonds, and inflation may subtly erode their spending power. 

   

The 1990s are gone, along with the old retirement planning assumptions. Even Bengen is revisiting the 4% rule today. He retired in 2013, and conceded in Barron’s that “we could have low returns for a long time … we’re in uncharted territory. It’s very hard to predict what will happen.” Recently, some respected voices in the financial services industry – including analysts at T. Rowe Price and American College professor Wade Pfau – have argued that retirees may be better off withdrawing roughly 3% of their savings each year.1

 

The era of “set it and forget it” has passed. Determining a retirement withdrawal rate today means considering plenty of variables, including changing market conditions and emerging economic trends.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – online.barrons.com/article/SB50001424053111903747504579177903984944392.html#articleTabs_article%3D1 [11/9/13]

2 – financialsense.com/contributors/james-j-puplava/how-to-give-yourself-an-annual-pay-raise-part-1 [4/23/12]

3 – frbsf.org/economic-research/publications/economic-letter/2013/july/cause-decline-long-term-us-government-bond-yields/ [7/13]

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Chevron, AT&T, Qwest, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Pfizer, Verizon, Merck, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

The 2 Biggest Retirement Misconceptions: While the idea of retirement has changed, certain financial assumptions haven’t.

While the idea of retirement has changed, certain financial assumptions haven’t.

 

We’ve all heard about the “new retirement”, the mix of work and play that many of us assume we will have in our lives one day. We do not expect “retirement” to be all leisure. While this is becoming a cultural assumption among baby boomers, it is interesting to see that certain financial assumptions haven’t really changed with the times.

In particular, there are two financial misconceptions that baby boomers can fall prey to – assumptions that could prove financially harmful for their future.

#1) Assuming retirement will last 10-15 years. Previous generations of Americans planned for retirements anticipated to last only 10-15 years. Today, both men and women who reach 65 can anticipate around 20 additional years of life. It’s important to note that this is just an average; a quarter of people reaching 65 will live beyond 90 and ten percent will live another five years or more.1

However, some of us may live much longer. The population of centenarians in the U.S. is growing – the Census Bureau counted 53,364 folks 100 years or older in 2010 and showed a steady 5.8 percent rise in centenarians since the previous count in 2000. It also notes that between 1980 and 2010 centenarians experienced a population boom, with a 65.8% rise in population, in comparison to 36.3% overall.2

If you’re reading this article, chances are you might be wealthy or at least “affluent.” And if you are, you likely have good health insurance and access to excellent health care. You may be poised to live longer because of these two factors. Given the landmark health care reforms of the Obama administration, we could see another boost in overall American longevity in the generation ahead.

Here’s the bottom line: every year, the possibility is increasing that your retirement could last 20 or 30 years … or longer. So assuming you’ll only need 10 or 15 years worth of retirement money could be a big mistake.

Many people don’t realize how much retirement money they may need. There is a relationship between Misconception #1 and Misconception #2 …

#2) Assuming too little risk. Our appetite for risk declines as we get older, and rightfully so. Yet there may be a danger in becoming too risk-averse.

Holding onto your retirement money is certainly important; so is your retirement income and quality of life. There are three financial issues that can affect your quality of life and/or income over time: taxes, health care costs and inflation. Over time, even 3-4% inflation gradually saps your purchasing power. Your dollar buys less and less.

Here’s a hypothetical challenge for you: for the rest of this year, you have to live on the income you earned in 1999. Could you manage that?

This is an extreme example, but that’s what can happen if your income doesn’t keep up with inflation – essentially, you end up living on yesterday’s money.

Taxes may be higher in the years ahead. So tax reduction and tax-advantaged investing have taken on even more importance whether you are 20, 40 or 60. Health care costs are climbing – we need to be prepared financially for the cost of acute, chronic and long-term care.

As you retire, you may assume that an extremely conservative approach to investing is mandatory. But given how long we may live – and how long retirement may last – growth investing is extremely important.

No one wants the “Rip Van Winkle” experience in retirement. No one should “wake up” 20 years from now only to find that the comfort of yesterday is gone. Retirees who retreat from growth investing may risk having this experience.

How are you envisioning retirement right now? Has your vision of retirement changed? Is retiring becoming more and more of a priority? Are you retired and looking to improve your finances? Regardless of where you’re at, it is vital to avoid the common misconceptions and proceed with clarity.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – http://www.socialsecurity.gov/planners/lifeexpectancy.htm [8/23/13]

2 –  http://www.census.gov/prod/cen2010/reports/c2010sr-03.pdf [12/12]

 

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Linda Bullwinkle, and The Retirement Group or FSC Financial Corp. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  This information should not be construed as investment advice. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Qwest, Chevron, Hughes, AT&T, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Verizon, Pfizer, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Linda Bullwinkle is a Representative with FSC Securities and may
be reached at http://www.theretirementgroup.com.