Financial Planning Doesn’t Have to Make You Sweat

June 19, 2015 by Sam Curmaci

For some people, the idea of financial planning induces nothing but stress. They know that it’s something that they need to do, especially if retirement is starting to loom closer, but there are a number of facets that make planning for that eventuality feel impossible. There are, however, a few things you can do to keep financial portfolio growing as you prepare for retirement–and most of them aren’t as scary as you think.

Commit a portion of money out of each check to savings. Look into whether or not your employer matches contributions made to your 401k program. If they do, you should contribute at least that much out of every check. If you don’t, you’re throwing money away! Starting from scratch, with no employer-sponsored baseline? Start with investing just one percent of each check toward retirement. You’ll be surprised by how quickly it adds up.

Diversify your investment portfolio. Yes, that’s one of the scary ones. If you’re not a financial guru, you may not have any idea how to start investing your money. Start with a place where you feel comfortable: choose a stock you’re familiar with, look into real estate investments, or choose another style of investment that makes you comfortable. If you don’t even know where to start, working with a financial adviser can be one of the best things you’ll ever do for your retirement savings.

Consider a retirement fund that will keep bringing in money. This will depend, in part, on how active you want to bewhen you retire. Do you want to keep working at least part of the time? Many professionals dread the thought of sitting around with nothing to do all day. Using rental properties as retirement income, maintaining a share in a business, or working on a part time basis are all excellent options for bringing in income while keeping you from becoming a couch potato.

Keep an eye on your debt. While it’s certainly important to save for retirement, it’s also important to work down debt prior to taking that leap. Having your mortgage paid off, for example, can be a huge relief when the time comes to retire and you don’t have that bill to pay. While you don’t have to enter into retirement completely debt-free, it is important to note that the more debt you have, the greater your retirement savings or income will need to be in order to cover it.

Be realistic about when you’ll be able to retire. Automatic retirement at 65 is no longer realistic for many individuals. People are living longer, in some cases long enough to outlive their savings. As you prepare for retirement, be sure that you have enough to allow you to retire when you’re ready and keep you living according to the quality of life you prefer for as long as possible. By thinking about this now, you avoid the possibility that you’ll reach seventy-five, eighty-five, or even ninety-five and suddenly discover that your retirement fund has run out.

Make sure that you consolidate your retirement accounts. Every time you change jobs, you need to go ahead and “roll over” the contents of your 401k to your IRA. You don’t want your money to just sit there where you have no idea how to access it when retirement comes, and if you change jobs frequently, it’s easy to lose track of where all of your retirement savings have gone. Instead, roll over your 401k any time you move on. Do you already have a few 401k accounts from previous employers that you haven’t consolidated with your existing portfolio? You’re better off hunting those down now, before you forget where all of them are.

Ready to start working with an investment team that will keep your financial portfolio on track? Contact us to see if we’re the one for you.

Investing for Retirement: Don’t Make These 7 ‘Fantasy’ Assumptions

June 12, 2015 by Sam Curmaci

It is rarely safe to make assumptions, especially when it comes to investing for retirement. While daydreaming can get you through a tough day at work, you don’t want your financial fantasies to ruin your retirement. Retirement planning is all about estimating what you will need to fund your ideal scenario after you stop working, but it also takes into account the unexpected. According to an article by thefiscaltimes.com, there are certain myths that can sabotage your retirement if you let them. With the help of a retirement investment specialist, you can identify any assumptions you have made about your retirement and tweak your financial plan and investment choices to reflect reality.

Don’t plan to work forever

Some pre-retirees in their 50s claim they won’t retire at age 62, yet that’s still the median age to retire in the U.S. Even if you want to work until you are 70 or older, your physical health could keep you from working. Also, unforeseen circumstances could lead you to move across the country. If you do find a position, it won’t pay as much as what you made in the past.

Don’t count on downsizing

investing for retirement — Today’s retirees are going to live longer than ever, which is why good financial planning is crucial.

Some people don’t max out their retirement contributions to a 403(b) or make the catch-up contributions starting at age 50 because they think their expenses will be lower in retirement. Selling your current home and buying a retirement home entails paying closing costs twice. Experts point out that 50 percent of pre-retirees don’t downsize. Even people who buy smaller homes want modern amenities that often cost more.

Don’t expect free health care

If you expect free health care when you are older, you may experience sticker shock at the pharmacy and doctor’s office. Experts say the average out-of-pocket costs most retirees pay is at least $1,800 per year. A retirement specialist will help you budget for medical costs as well as review any long-term health care insurance policies you have. Investing for retirement means you will have the money you need for health care when you aren’t working.

Don’t bank on social security

One Gallup poll revealed more than one-third of pre-retirees intend to rely on social security as a major source of income. Unfortunately, the average person’s social security check is about $1,200 a month. An article by investors.com reports social security benefits will likely be cut starting in 2017. Part of your retirement planning should take into account possible cuts to benefits. Experts say in 2022 and beyond, workers age 62 could see a 30 percent reduction.

Don’t order your tombstone

If you have a morbid philosophy about retirement, you likely tell yourself you won’t need to worry about it because you’ll be dead. In reality, people are living longer than ever. According to the fiscaltimes.com piece, 65-year-old men can expect to live to 86.6 years. Meanwhile, a 65-year-old female can expect to live to 88.8 years. Even if you suffer with medical conditions, the modern advances in health care will prolong your life.

Don’t underestimate the child factor

Most people love their children. Even if helping your adult children puts your retirement at risk, it’s difficult to cut off children. Retirement planners and wealth managers often advise their clients to show financial tough love. Realistically, you have to plan that you’ll continue to provide financial support to people you love. Investing for retirement with your children in mind will prevent any retirement shortfalls.

Don’t forget inflation

Failing to factor in inflation can ruin your retirement future. No one can accurately predict what will happen to the prices of gasoline, food and housing. Some other unpredictable expenses in retirement include property tax bills, home owner’s insurance and airfare or travel expenses.

At S.A.C. Investments, we pride ourselves on listening to our clients and understanding their individual vision for retirement. We help you make good financial choices so your retirement plans provide you with dividends and income. For more information on investing for retirement with annuities, bonds, exchange-traded funds and mutual funds, please contact us.

Five Questions to Answer When Financial Planning for Retirement

June 10, 2015 by Sam Curmaci

From the time we begin working at our first full-time jobs, opportunities are presented for us to begin financial planning for retirement. Because many people begin their careers during the early to mid 20s, they do not always take evaluating options seriously.

As the years pass and retirement becomes a more tangible topic, many people realize that they are not financially prepared to enter retirement. This realization can add unnecessary stress to your life. Rather than waiting until it is too late and realizing that retirement is not an option for you, or that it will require dramatic lifestyle changes, start making gradual changes now.

Understanding how much income you will need to live comfortably in retirement is critical to your planning. Five questions that you should ask yourself:

At what age do I plan to retire?
Will I have other sources of income (Social Security, real estate, etc.)?
Is my current retirement fund investment rate high enough to meet my financial needs?
Do I have enough funds for at least 20 years of retirement, regardless of my retirement age?
What type of retirement do you want to have?

When planning for retirement, most people have not answered many of these questions. We save for an arbitrary retirement goal that does not consider our retirement goals. Do you want to be a world traveler? Do you know how much of your pre-retirement income you would like to have each month? Do you know what your Social Security benefit will be?

While these questions may seem like common sense, according to the U.S. Department of Labor, half of Americans begin saving for retirement without understanding how much money they will actually need to retire. 30% of employees do not contribute to their company sponsored 401K plan. And, with life expectancy rising in the U.S., the average retirement is 20 years.

The issues with retirement planning extend beyond not being aware of the best approach to planning for a successful retirement. Many people know the necessary steps to undertake, but stray from their plan during difficult times. The market crashes and we lower our investment percentages for our 401K. Financial difficulties occur and we make withdrawals against our retirement nest egg. Or, we put all of our eggs in one basket and do not explore individual retirement plans to supplement our 401K and Social Security income.

And, the biggest mistake that people make? They do not consult a financial adviser to help assess their finances and help them develop a clear plan with goals, checkpoints and secondary options to help make sure that a successful retirement is within reach. Think about it – when people are sick, they visit the doctor. When they purchase homes, they hire a real estate professional. If legal advice is needed, they hire an attorney. In so many areas of their lives, people readily identify the need for professional support and do not hesitate to pursue it. Yet, only 52% of pre-retirees and 44% of retirees have financial advisers, in spite of research that strongly suggests that they are a much-needed resource for retirement planning.

Rather than viewing financial advisers as an additional expense that negatively impacts retirement funding, financial advisers should be viewed as powerful tools to maximize the return on your retirement investments. The questions to plan effectively for retirement are endless. Answering one question can generate two additional follow-ups. Financial planning for retirement is complicated and too important to your future to leave it to chance. A qualified financial adviser can bring focus to your planning and educate you so that you are making the best decisions for your life. Contact a retirement specialist and develop a concrete plan for your future.