Monthly Archives: November 2015

Quick Retirement Income Calculator

What will your income be in retirement? If you are like most people, you are not sure. You may not have a financial plan. A plan is a roadmap that guides you to your financial destination. We advise everyone to begin a plan as early as possible. It takes the worry out of outliving your savings.

But there’s a quick and easy “Estimator” developed by one of the largest investment firms in the world that get you an answer in less than a minute. It uses current estimates for market returns, interest rates and life expectancy.

If you are between the ages of 55 and 74, all you need to know is the amount you have saved for retirement. The Quick Calculator will give you your estimated annual retirement income.

If you are interested in finding out what your estimate is, contact Korving & Company.

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Give Thanks for Our Blessings

We have come a very long way from the days of our country’s founding. Recent research has put forth the gruesome suggestion that the first settlers in Jamestown may well have resorted to cannibalism to survive the winter. Today our biggest nutritional problem appears to be obesity.

Yet, there is a pervasive sense of gloom. It is very easy to be thankful when we were experiencing a booming economy. Instead, we tune into the nightly news to hear of increased health care costs, increasing fear of terrorism and a plodding economic recovery.

That is why it is even more important than normal to be thankful for the things that are going right with the U.S. economy. We are living through an economic battle between free enterprise and wealth creation versus government and wealth redistribution. So far, it is the entrepreneurs that have kept the economy moving forward. There have been incredible changes in the past several years. It turns out that we really can “drill, baby drill!” to get lower oil and gas prices. Computers, apps and the internet have made life easier for just about everyone. Medical advances allow people to continue meaningful lives after facing ailments that would have killed their parents. Our grocery store shelves have never been more full and varied. Driverless cars, once only a science fiction dream, are under development. Imagine what that will mean for the elderly who now have their cars keys taken away when they get too old to drive.

One of the things that contribute to the sense of gloom is that the print and broadcast media seems to focus obsessively on the political world. Keep in mind that the TV broadcasters have to fill up 24 hours or time with “stuff” and the newspapers are starving for readers. Some have termed this “econo-tainment,” which seems designed to heighten anxiety with predictions of disaster.

Despite many obstacles, the economy has moved forward, albeit more slowly than we would have wished. So as you gather with your family this week, give some thanks to the people who have invented, innovated and built things that make out lives better in so many ways.

Happy Thanksgiving!

“Worry Ends Where Faith Begins”

While passing a church the other day I saw a sign that said “Worry Ends Where Faith Begins.” It suddenly struck me that this is true in so many situations. There are a number of things that worry us. Depending on nature of the worry, once we take them to people in whom we have faith, our worries often end.

If you have worries about your health, such as an unexplained pain or other ailment, you begin to worry. You take your worry to your doctor. Perhaps the doctor tells you that it’s just a muscle strain, or he prescribes medicine to fix what’s wrong. Your medical worry ends when your doctor fixes what’s wrong.

Maybe you are reminded that you have not updated your estate plan for years even though your family situation has changed a lot. You begin to realize that your estate will not go to the people who mean the most to you. Your worry ends when you have a proper will drawn up by an estate planning attorney.

Perhaps you share a worry common to many others, that you may some day run out of money. According to recent research, even people with very substantial wealth worry about it. Taking your worries to a financial planner may be the answer. Professional advisors who specialize in financial planning, portfolio construction, investment management and cash flow planning can provide the guidance you need. An independent Registered Investment Advisor (RIA) can help you create a financial plan and the proper portfolio construction and management to help see you through retirement without running out of money. You can find one close to you at

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Get the kind of advice that Fortune 500 Executives have.

I had an opportunity to attend an investment conference recently at which Alan Mulally spoke.   Mulally was the Chief Executive Officer of Boeing Aircraft before being recruited by William Ford to become President and CEO of Ford Motor.   He rescued Ford from the brink of bankruptcy; making it the only US car company to avoid a bailout by the government.

His talk was inspiring and revealing.   His management technique was simple: make a plan for the long term, review it regularly, and make changes when appropriate.

Top executives like Mulally are constantly solicited by top investment firms like Goldman Sachs who use their brand name prestige to impress their potential clients.   You know you’re rich when a Goldman salesman comes calling.

But Mulally didn’t go that way.   He chose an independent RIA (Registered Investment Advisor) to manage his family’s finances.   He used the same approach to managing his personal finances as he did to guiding the companies he led successfully.

He wanted his advisor to be someone who focused on him as an individual, not on simply his money. His advisor treats him like a friend, not a constant source of income. The service he gives goes beyond investments and includes retirement planning, estate planning and tax planning. His advisor is not selling a product; he’s offering Mulally financial peace.

Alan Mulally and his wife Jane have five children. All are adults now and out of the home. All five of them use the same advisor as their father.

You don’t have to be the Chief Executive Officer of a Fortune 500 company to get the kind of advisor that Alan Mulally and his family have. Its available right here from Korving & Company, an RIA with expertise that comes from decades of experience, who treats you like a friend, and offers you financial peace.

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Are fees really the enemy?

The popular press puts a great deal of emphasis on the costs and expenses of mutual funds and investment advice. I am price conscious and shop around for many things. All things being equal, I prefer to pay less rather than more. However, all things are rarely equal. Hamburger is not steak. A Cadillac is not the same as a used Yugo.

The disadvantage facing most investors is that today’s investment market is not your father’s market. Those words are not even mine; they come from a doctor I was speaking to recently who uses an investment firm to manage his money. His portfolio represents his retirement, and it is very important to him. He knows his limitations and knows when to consult a professional. It’s not that he isn’t smart; it’s that he’s smart enough to realize that he doesn’t have the expertise or the time to do the job as well as an investment professional.

As Registered Investment Advisors, we are fiduciaries; we have the legal responsibility to abide by the prudence rule (as opposed to brokers, who only have to abide by a suitability rule). Some interpret our responsibility as meaning that we should choose investments that cost as little as possible, going for the cheapest option. But do you always purchase something exclusively on the lowest cost without taking features, quality, or your personal preferences into consideration?

As I drive to work each day, I pass an auto dealership featuring a new car with a price tag of $9,999 prominently displayed. I’m never tempted to stop in and buy this car, despite its low price. It does not meet my needs nor does it have the features that I’m looking for in a new car. Why would an investment be any different? Too many investors believe that there is no difference between various stocks, mutual funds or investment advisors. They focus exclusively on price and ignore risk, diversification, asset allocation and quality. People who go to great lengths to check out the features on the cars they buy often don’t know what’s in the mutual funds they own. Yet these are the things that often determine how well they will live in retirement. It’s this knowledge that professional investment managers bring to the table.

People who would never diagnose their own illness or write their own will are too often persuaded to roll the dice on their retirement. Don’t make that same mistake with your investments.

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The Advantages of Waiting to Retire at 70

There are a number of reasons why people should think about delaying retirement past the traditional age of 65. The retirement age of 65 was set in 1935 when Congress enacted Social Security and lifespans were much shorter.

Several things have happened in the decades following 1935 that now makes it reasonable for people to delay retiring until age 70. First, the structure of work has changed. Instead of working on a farm or doing heavy lifting in factories, the typical American worker is physically capable of working longer than 65. For the vast majority of workers, there’s more sitting or standing than manual labor. The second factor is the longer lives that U.S. citizens now enjoy. While not universally true, many people do enjoy their jobs do and prefer to go to work instead of sitting around the house or playing endless rounds of golf.

From the financial perspective, it makes even more sense to work past age 65. Monthly Social Security checks increase by 76% just by waiting until age 70 to retire instead of collecting at age 62 (the first year of eligibility) –76%!

As people get older and advance in their careers, their salary often increases with their tenure, meaning that if they leave at age 65, they could be leaving during their peak earning years. By continuing to work they can continue to add to their retirement savings. This is important for people with pensions whose retirement benefits continue to grow the longer they work. And it becomes even more important for people whose retirement is self-funded by their 401(k) plan, IRA or other investment portfolios.

Finally, from a purely actuarial perspective, the longer we work and bring in income, the less time we will spend fully retired and withdrawing from our retirement savings. The greatest fear that people have is running out of money during retirement. Delaying retirement until age 70 or beyond reduces that possibility.

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Bull and Bear Markets – A History

Following the “Great Recession” of 2008 not a day goes by without a prediction of another Bear Market. It’s often useful to remind ourselves of market history. While we need to remember that past performance is no guarantee of future results, we received the this fascinating chart which shows the historical performance of the S&P 500 stock market index since 1926. It’s quite dramatic.

Bull and Bear Markets

Bull and Bear markets follow each other.

What’s a Bear Market? It’s often defined as a drop of at least 20% from the previous high.

A Bull Market is measured from the point where the market stops dropping until it reaches a new peak.

What’s obvious from the chart is that historically, Bear Markets are relatively short and Bull Markets last a much longer time. A large part of this is driven by investor psychology. When markets begin to decline, the typical investor becomes concerned. As the value of their portfolio continues to go down they reach a point where fear of further losses forces them to sell. This selling contributes to a further decline. However, at some point all the fearful investors are out of the market. The decline stops, setting the stage for the next Bull Market.

  • The average Bull Market period lasted 8.8 years with an average cumulative total return of 461%.
  • The average Bear Market period lasted 1.3 years with an average cumulative loss of -41%.

Of course retirees on a fixed income have to be cautious because a major loss of retirement assets, even if a Bear Market is relatively short, can have a major impact on their lifestyle. For this reason it’s important to create portfolios that are going to participate in Bull Markets but are also robust enough to survive Bear Markets.

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