Category Archives: Retirement

Who needs a financial advisor?

Investment Approach

Not everyone needs a financial advisor. But if you are not sure about how your financial assets should be invested, if you make major errors when you invest, you are a candidate for getting professional financial advice.

Fees are the main barrier that keeps people from getting the kind of advice that would improve their financial lives.

But just as doctors get paid for keeping us healthy and lawyers for protecting our interests, getting good financial guidance is worth every penny. Solving our financial problems has a huge impact on our lives. Making sure we don’t run out of money during retirement that can last decades is often people’s biggest fear in life.

People who are in good shape financially may not need assistance. But too many times people need guidance but are reluctant to pay for what they need. Instead, they search the internet, or ask friends or family who are often not knowledgeable. And even if they get good advice, friends and family are not going to create a plan and make sure that the plan is followed. That’s not their job.

That’s were a professional investment advisor comes in. He’s paid to create a plan, to design a portfolio for you, manage that portfolio and alert you in case the plan needs adjusting. Like a physician conducting a periodic physical, a financial professional keeps track of your progress and fixes it when things go wrong.

If you think you may need help, find an advisor in whom you have confidence, pay him a fair fee for his services and you’ll have the peace of mind knowing that your financial future is in good hands.

 

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Planning Makes a Difference

Five reasons why you should work with us to create a retirement plan.

  1. Helps you focus on your goals.
  2. Address your concerns.
  3. Identify threats to your retirement plans.
  4. Feel more confident about your future.
  5. Provides a roadmap to your retirement.

Click on the link for more: Planning Makes a Difference

 

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5 Reasons why you should work with a professional to create a retirement plan

  1. Focus your goals in retirement and how you will pay for them.
  2. Address your concerns and expectations for retirement.
  3. Identify things that could pose a threat to your retirement and manage them.
  4. Feel more educated, confident and in control of your financial future.
  5. Help you navigate the complexity of financially moving into retirement.

Let us help you create the plan that will give you confidence to face decades in retirement.

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Financial Planning is the new employee benefit.

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Some of the most progressive companies are introducing a new employee benefit: company-paid financial guidance.

Concerned about their employees’ retirement funds, and acknowledging the increasing scarcity of skilled employees, companies are looking for a benefit that is relatively inexpensive while making a big difference in employee satisfaction.

Financial insecurity troubles most people, from the entry-level employee to the highly compensated professional. Half of U.S. households are at risk of being unable to maintain their standard of living in retirement, according to one study. For most people, financial stress is a distraction from work and leads to lower productivity.

Money is the single largest source of stress for employees, ahead of work, relationships or health.
Employers are concerned about the impact employees’ financial problems are creating problems at work. Here’s what employers say they are most concerned about:
• Lack of retirement readiness 16%
• Paying down debt 15%
• Lack of emergency savings 13%
• Other 3%

Without professional guidance, most people take a seat-of-the pants approach. But that leaves them and their families wondering how they will survive the decades that they will spend after leaving the work force.

Many companies offer a retirement program, like a 401k, but are ill-equipped to do more than provide a menu of investment choices. To fill the information gap, more companies are offering financial-wellness programs. Others are considering such a move.

A program offered by Korving & Co. is a series of programs, provided by a CFP® (Certified Financial Planner™) professional. These are designed to educate participants about debt, investing, and retirement income planning.

Providing employees with professional education about these issues, on company time, in a relaxed setting is an economical way for companies to help their employees reduce stress. It also creates a great deal of good will and loyalty on the part of employees.

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Savers vs. Investors

The last two decades has been devastating for savers, especially retirees.

A Wall Street Journal article noted that retirees continue to get squeezed and are concerned about making their savings last. While the Dow Jones Industrial Average (DJIA) index has tripled since the trough of the financial crisis, the average one-year CD has not paid more than 1 percent since 2009.

The DJIA stood at 26,405 (as of 1/25/2018), a more than 20 percent increase since the 2016 election, and the value of the digital currency. As a result of a strong stock market performance, stocks may have become an outsized portion of investors’ portfolios, thereby necessitating some rebalancing.

This means that investors who have benefited from the stock markets rise may find themselves taking more risk than they realize.

If you are concerned about stock market risk, call us.

 

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The Great Wealth Transfer: Husband to Wife

Let’s face it, women outlive men. We’ve heard this before, but this presents a unique challenge for planners.

In the traditional family the husband is often responsible for investments. Many financial planners never talk to the wife until the husband dies. That’s when we find out how much or how little the wife knows about the family finances.

While the financial services industry focuses on the transfer of wealth from parents to children, the greatest wealth transfer is from husband to wife.

Approximately 76 million baby boomers are steamrolling toward retirement, and among them 58 percent of women of retirement age are going to need financial guidance. This is especially true of the do-it-yourself investor. In too many of these cases, the wife is just unaware of the husband’s investment strategy. She may not even know the value of the family investments or even where they are located.

Sometimes the situation is complicated by children still living at home, and by ageing parents who depend of the surviving spouse for care and support.

These are just some of the reasons we published a set of books: Before I Go, and the Before I Go Workbook.

Copies of these books are available at Amazon.com or you can contact us.

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Required Minimum Distributions

In 2017, the oldest baby boomers, who turned age 70 in 2016, reached the required beginning date (RBD) for taking withdrawals from traditional IRAs and employer retirement savings plans: April 1, 2017. The RBD, the latest possible date allowed to take a mandatory required minimum distribution (RMD) from traditional IRAs and tax-deferred plans, is April 1 of the year following the year that an individual reaches age 70½ and baby boomers are there now. At this time, retirees are required to spend down these accounts, whether they need the money or not, and withdrawals are taxed as ordinary income.

A 2017 article in the AAII Journal noted that the RMD schedule does not fit retirees’ spending patterns. The first RMD at age 70½ is 3.65 percent of the account balance and the RMD at age 90 is 8.77 percent of the account balance, which looks like a “waterfall” when plotted on a graph. About $10 trillion is sitting in baby boomers’ tax-deferred accounts. If they do not calculate the amount of their RMD correctly, the penalty is 50 percent of the amount that they failed to withdraw.

Call us for more information.

 

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Getting a written retirement plan makes you twice as likely to succeed.

A study by the Charles Schwab brokerage firm found that people with a written retirement plan are 60 percent more likely to increase their 401(k) contributions and twice as likely than others to stick to a monthly savings goal. But only 24 percent of Americans have a financial plan in writing, according to the study. Those with a plan are also more likely to have a budget and an emergency fund.

Call us for a customized written retirement plan just for you.

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Saving and Retirement

The Center for Retirement Research (CRR) at Boston College, found that 52 percent of working-age U.S. households are at risk of being unable to maintain their standard of living in retirement. Many recognize the possibility of a shortfall but 19 percent do not. Contributing factors include increased life expectancy, declining Social Security income replacement, and the shift from pensions to defined contribution savings plans. Older Americans are entering retirement carrying more debt. According to a paper by the Retirement Research Center at the University of Michigan, more Americans between ages 56 to 61 are carrying more debt than any time in recent history. Another retirement problem receiving increasing attention is the social isolation of retirees, which has been deemed a risk equal to or greater than major health problems such as obesity.

Studies about retirement savings plan contributions indicate a lack of participation by many American workers. A study by the PEW Charitable Trusts found that 25 percent of millennial adults participate in employer-sponsored defined contribution retirement plans versus 40 percent of Generation X and 43 percent of baby boomers. Stated another way, a large majority of millennials have no retirement savings plan.

If you are concerned about having the money to retire, call us.

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Retirement: there’s good news and bad news.

First, the good news. According to a leading investment firm, current retirees are doing just fine. They studied a large group of retirees. They’re doing very well.  The group that retired about 20 years ago have about 80% of their retirement savings intact. In fact, one-third of these retirees have more money than when they retired.

But here’s the bad news. These retirees are different from those retiring today or those just beginning their careers. Their experiences are different and so are their resources.

If you have been retired for 20 years that makes you about 85 years old. These older retirees grew up during the “Great Depression” and that had a lifelong impact on them. Their experience made them lifelong savers. Many also worked for companies that provided their employees defined benefit pension plans.

This means is that many of these pensioners have two sources of income: a company pension and social security. Living within their means, they were able to leave their personal retirement assets untouched.

Some of the more affluent may have bought vacation homes which have appreciated in value. Others have begun gifting to their children and grandchildren.

We can’t infer from their success that newer retirees will do nearly as well. There are several reasons why. Except for government employees, few private sector employees have defined benefit pension plans. Social Security is under pressure and will simply not have enough in the Trust Fund to continue to pay retirees at the same rate as current retirees. Medicare is also running large deficits which will result in higher medical expenses for the elderly.

New and future retirees will not have private pensions, face lower social security income and higher medical expenses. Only saving and investing wisely will save them.

For more information contact us.

 

 

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