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By The Affinity Group | Sunday, 26 January 2020
The Top 10 Things To Consider When Preparing for Retirement
Define your cash flow
If you haven’t already developed a budget for yourself, do it now. Defining your cash flow-how much money you have both coming in and going out _ is your first step.Understanding your spending patterns will help you to know how much income you’ll need to create once you’re in retirement.
Social Security timing.
Many people leave tens of thousands of dollars on the table by claiming too soon or not coordinating benefit strategies with their spouse. It is very important to analyze your benefits and calculate the best time to claim.
Create an income strategy.
A retirement strategy has two phases: one in which you build assets to help fund your retirement and one in which you use those assets to generate income in retirement.
A retirement plan that does not account for inflation could result in you having to adjust your lifestyle in retirement. Make sure your retirement plan has a provision for increasing income, or reducing expenses, to account for inflation in retirement.
Sequence of returns.
The risk of receiving negative returns as you begin your retirement and make withdrawals from the underlying investments can dramatically impact your retirement plan.
Fees play an important part of your overall portfolio performance. Most people don’t realize the exorbitant fees associated with common investments, investment products, and financial advisor fees. Fewer fees mean more money in your pocket.
Review insurance coverages.
It is very important to review your health, life, home and auto insurance policies. Every year, premiums can increase. Reviewing your coverage regularly ensures you are in the most cost-effective plan.
Calculate your risks.
It’s not a bad idea to invest in the stock market. However, you may not want to put all of your eggs in one basket. Know the risks and understand what your timeframe may be to recoup any loses before you commit to anything. The fact is, as your near retirement, you have a much shorter timeframe to
recover from potential market downturns.
Plan for a long life.
With advances in medical care and a trend toward healthier lifestyles, it is not uncommon for people to live another 20, 30, or even 40 years in retirement. That’s great, but it means your money needs to last longer as well.
Last but not least, recognize you might want help with all of the above.
That’s why we’re here. Our business is understanding the important things to consider when planning for retirement, as well as the products and strategies that can help you achieve your goals. We want to help you live the life you dream of, and it all starts with having a plan.
By Theodore G. Bytnar, CFF® | Friday, 26 April 2019
How Fees Could Be Chipping Away at Your Retirement Savings
Everybody loves a bargain. Some people will shop for days to save $10 on a pair of shoes. And yet when it comes to retirement-plan fees, not many people shop around or even know what they are paying.
A TD Ameritrade study showed that approximately 37% of people thought their 401(k) plan had no fees at all. They are wrong. Most people who do know they have fees have no idea how to find them or what they are, according to the study.
And while the numbers may look small, ignoring these expenses can be risky to your retirement because they can really add up over time.
A Government Accountability Office analysis provided a good example of why that is so. Let’s say two people each had $20,000 in a 401(k) and left it there 20 years with an annual average rate of return of 7 percent. One person paid a 1.5 percent annual fee and the other a 0.5 percent fee. Once those two decades passed, the person who he paid a 0.5 percent fee would have a balance of about $70,500. But the percent whose annual fee was 1.5 percent would have a balance of about $58,400.
That’s a significant difference.
Fees for 401(k) plans fall into two general categories: administrative (also known as "participation") fees and investment fees. Most 401(k) plans charge administrative fees to cover the costs of items like record keeping, legal services, customer support and transaction processing.
401(k) plans also typically charge investment fees. These are fees charged by the investment funds you choose and are typically listed as "expense ratios" in the plan's literature. These fees are expressed as a percentage of assets, and the average 401(k) costs approximately 1% of assets every year for all fees.
That means the average 401(k) participant will pay approximately $1,000 for every $100,000 in plan assets, but that can vary quite a bit depending on how large the 401(k) plan is (the big plans are typically cheaper and have the lowest fees).
If you are investing in a 401(k) plan, ask for a copy of your fee disclosure and look at the expense ratios on the mutual funds. The Center for Retirement Research at Boston College reports that, in recent years, the fees charged by actively managed mutual funds — including those in 401(k) plans — have dropped. Since 2015, the average fee dropped from 0.78 percent to 0.75 percent.
One option for people looking for lower administrative fees is index funds. However, there is no manager actively choosing investments for the fund on a day-to-day basis. They passively track the investments of a specific market index. For those who are paying a money-management firm to select investments, if the firm does a great job of providing consistent performance over time, then it may be worth the higher fees. The IRS permits investors to deduct certain expenses incurred on taxable investments, such as fees for investment counsel. If you find your 401(k) has high fees, ask your employer to look into it. Under federal law, employers have a fiduciary duty to offer reasonably priced options and to monitor the quality of the plan. Your managers may be receptive—after all, they probably have money in the plan, too.
Recent Department of Labor fiduciary rules have made it easier for investors to know what fees they are paying by requiring the disclosure of all fees and commissions.
In many cases, the more investors learn about fees, the more they start choosing investments that cost less. After all, it will save you a lot more money than what you may spend on a pair of shoes.
Michael J. Bytnar CFP® RICP® | Tuesday, 26 March 2019
Here's Why More People Wait Longer to Retire
As we travel deeper into another year, you may be excited that you’re a year closer to retirement. You’ve targeted a walk-off-into-the-sunset date, and like most people, you can’t wait.
But perhaps you should. More people are putting off retirement until their late 60s or sometime in their 70s, the Boston Globe reported.
One in five Americans 65 or over is still working – the highest percentage since the late 1960s, the Associated Press reported.
Why? To increase savings and invest longer; to ultimately receive bigger Social Security checks; or perhaps mainly to stay busy and more engaged intellectually and socially.
But for many, the financial factors make it a fairly easy decision to stay employed as long as possible.Retirement is still something most people look forward to, but over the years, some of the reasons for anticipation have dwindled.During the Industrial Age, for example, more people worked jobs that require manual labor and were hard on the body. By mid-20th century, many rank-and-file workers had the comfort of a pension waiting for them upon retirement. They simply had to accumulate enough credits to retire while knowing that a pension would provide income for the rest of their lives.
But now, pensions are far less common, giving way to employee-contribution retirement vehicles like 401(k)s. Also, physically demanding jobs are more of a rarity for pre-retirees, and modern-day ergonomic training is available to help ease the aches and pains of the daily grind.Workers today understand they may have to provide for a substantially greater share of their retirement income thanks to longer average lifespans.
This makes retirement planning far different than, say, planning for your child’s college. When saving for their education, parents have the advantage of knowing when the student will enroll in college and generally how long he or she will be there. The “when” and “how long” are unknown factors when it comes to retirement.
These are the types of variables that are difficult to gauge and the bottom-line reasons many are moving back their retirement age. Take savings: Retirement requires much more of that than it did 50 years ago. A survey showed the two top reasons people keep working into their late 60s or 70s is to grow their nest egg and earn more money for fun purposes in retirement, US News reported.
Having enough for basic living expenses, medical, etc., is a concern that’s often not alleviated by Social Security. And it’s punitive to receive the benefits at the earliest allowed time – age 62, or before full retirement age. Taking Social Security early could mean as much as 30 percent less in monthly benefits compared to waiting until full retirement age. That threshold for many now is age 66 to 67, and many financial professionals recommend waiting until 70 when the benefits are at their maximum.
Another key factor to remember about Social Security and how it relates to continuing full-time employment: there’s no penalty for working while taking benefits after your full retirement age. But there is a penalty if you take Social Security early and still work.During 2018, if you worked while drawing Social Security before your retirement age, you were penalized if you earned more than $17,040 from your job. For every $2 earned over that amount, you had to repay $1 to Social Security, Money Talks News reported.Also, for many the new tax laws ensure lower taxes on annual income and make working into the senior years even more desirable. And not to be discounted are the company benefits one can keep enjoying while extending their work life. Many seniors continue to work because their employer’s health insurance is better and less expensive than Medicare.
Although we are beginning to experience a rise in interest rates, we are still at historic lows, which also makes it more difficult for retirees or those looking at retirement to generate guaranteed sources of income - further delaying retirement in some cases.
One must also look at where we are in the current economic/market cycle. Being that we may be in the later innings of this cycle, those planning retirement must evaluate and plan for the potential to retire and begin living off of their retirement savings while experiencing a recessionary economic and bear market cycle early on in retirement.
There are more reasons than ever to keep working longer than people once did, and with smart planning from a Certified Financial Planner™, it can benefit you in the long run, making you more secure and ready to enjoy retirement.
By Zachary Leggo CFF® | Thursday, 20 December 2018
Read Newsmax: 3 Steps to Prepare for Another Market Collapse
It’s been more than 10 years since the great stock market crash of 2008, and the recent market volatility has made some people jittery – especially considering stock indexes can seemingly plunge hundreds of points in a matter of hours.
Those same nervous people ask: Are we due for yet another financial crisis; and perhaps not just a momentary dip, but a long-term downward trend that will hurl the country into a bear market and another recession?
Some people may even wonder whether it’s time to get their money out of the market.
It’s natural to have questions, but it’s important to understand that the answers won’t be the same for everyone, so the last thing you want to do is panic. Your decisions should be based less on what’s happening in the market at any given moment and more about where you are in your life personally.
Let’s face it, people have challenges managing their finances every day. It’s not just stock market swings that create angst. Fluctuating interest rates, taxes, debt and inflation all play a role, and the effects can be unsettling.
Market corrections and bear markets, after all, are just part of the game. Corrections – a drop of at least 10 percent from the market’s recent high – actually happen fairly often. On average, they occur about once a year and a bear market, which is a 20% downturn, happened on average every 3 ½ years from 1900 to 2015, so there’s no need to get overwrought with every hiccup in the market.
Let me offer a few suggestions on how you should be weighing where you are with your investments – and your life:
Take stock of your situation. Don’t let the market’s ups and downs panic you, but do let them be a reminder that you might want to assess whether you have the right investment balance. This is especially important if you’re within five to 10 years of retirement or you are already retired. Consider what percentage of your money is in accounts with more risk, such as the stock market, and what percentage is in accounts with less risk. Some people in or near retirement may be tempted to stick with high-risk investments, but they need to realize they don’t have decades to recover if their portfolio takes a major hit. On the other hand, time is on your side if you are a younger investor. You are better situated to ride out a dip and wait for the market to head back up again.
Know yourself and your risk tolerance. People make mistakes when they let emotions rule their investing decisions. You can get so excited about a bull market that you take too many risks and put your finances in danger. You can also let yourself become so high-strung about the potential for losses that you stash all of your money into low-risk accounts that pay little interest, and you miss out on excellent opportunities to grow your portfolio while also losing out to inflation. It’s important to make decisions based on sound information rather that the emotion of the moment. Emotions play a role in investing, but you need to keep them under control if you want to be successful.
Don’t get caught up in all the hype. Turn on the TV and you may encounter talking heads who are overly optimistic (remember the term irrational exuberance?) or who are the bearers of gloom and doom. While you should pay attention to what’s going on with the market and your investments, you don’t want to get caught up in every twist and turn of the market’s soap-opera-like saga. You also shouldn’t assume that every single news event is somehow going to affect your investments. But if you are truly concerned about something that just happened or the way things seemed headed, talk with your advisor to determine whether a change in your investment mix is warranted.
Will we have another correction? When will it happen? How bad will it be? Those questions aren’t easy to answer, but one thing is certain: the future will come, regardless of whether we are financially ready or not.
Quoted - Nate Lawson | Sunday, 17 February 2019
The #1 Tip Of Successful Investing
Investing is the means to reaching dreams—dreams people have at different stages of their lives. Younger people dream of lavish houses, luxury cars, elegant yachts, and traveling to exotic places. Older people dream of sending their children to top colleges, buying vacation homes, and a comfortable retirement.
Simply put, investing is about the “meaning of money,” as John Hagensen, the founder and managing director of Keystone Wealth Partners, puts it.
And that’s the # 1 investment tip, according to Hagensen. “My "Number 1 Tip for Building a Stronger Financial Future" is to: Identify Your Real Purpose For Money,” says Hagensen. “Nothing inspires financial progress more effectively than when we align our money and our mission. Money is simply a tool that we use to accomplish meaningful things in our lives. If we lack an understanding of why that tool matters, our account balances become empty and nothing more than an arbitrary number on a page.”
Andrew McNair, the president of SWAN Capital, agrees.“Start with the end in mind. Many people have dreams of retirement yet haven't sat down to put a price tag on their ideal retirement,” says McNair. “How much will the 2nd home on the beach or in the mountains cost? How much traveling do you really plan to do? Often times it takes far less than we once thought to have the dream retirement we wish.”
Starting with an “end in mind,” a financial dream in other words, requires careful planning, according to Zach Gray, an Investment Adviser Representative and partner at Wall Street Financial Group.
That’s his #1 tip for reaching the dream. “My biggest tip for building your financial future is to "start planning and the sooner, the better," says Gray. “Several studies show that we spend nearly 10x more time planning vacations vs. planning our retirements during our working years. It's never too early to begin the planning process and get the ball rolling.”
Nathan Lawson, Financial Service Rep - The Affinity Group, tells investors to invest in stocks.“The easiest thing to do is invest in the stock market. You can create a money making machine that will work for you when you’re sleeping. The only way to get ahead is to invest for your future.”
Meanwhile, Ari Janmohamed, a registered Investment Advisor Representative in Sandy Utah, reminds investors something Warren Buffet said. ‘The #1 rule of investing is Never Lose Money.’ “You can’t build your financial future if you’re trying to make up for past losses,” he says. “ You will actually have more money with average returns and no losses than with huge returns and average losses.”
Simply put, don’t be greedy in investing in your life’s dreams.
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