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Couple Retires By Mid-30s

Couple Retires By Mid-30s

What’s your definition of “early” retirement? Sixty? Fifty-two?

A California couple recently retired in their mid-30s with $1 million in the bank, according to a story in Forbes magazine. 

That remarkable accomplishment would be difficult for most of us to replicate. I know I couldn’t do it — not with four kids!

The couple, Travis and Amanda, had no kids, were well-paid tech professionals, and already had $350,000 saved when they undertook this project. But their story reinforces several important lessons about building wealth for retirement.

Set a goal. When Travis lost his information systems job in 2012, he quickly realized he really didn’t like working. He preferred the freedom of not working. So, he and Amanda set a goal of amassing enough money to retire as soon as possible. They pegged that number at $1 million. The couple planned to live on 3 percent to 4 percent of their portfolio’s value every year and expected a 7 percent annual growth rate.

Get organized. You can’t map a journey unless you know the starting point. Travis and Amanda put all their financial information into the free budgeting site Mint.com and did a deep dive analysis of their assets and spending. They also combined several 401(k)s from former employers.

Your job is your biggest asset. Travis went back to work purely to make the couple’s retirement dream come true. He switched jobs three times in three years to obtain salary increases. Travis told Forbes he kept his eyes on the prize, which made a great employee. Amanda, a chemical engineer, stayed in her job and racked up seniority increases. At their earnings peak, the couple was making a combined $200,000.

Prioritize saving. The couple saved as much as 65 percent of their income during the three years it took to amass $1 million. They lived in a rent-controlled $2,200-a-month Oakland, Calif., house (crazy cheap for the Bay Area) and aggressively cut costs by doing things like riding bikes instead of driving, and hanging the laundry outside to save on running the dryer. The two credit their frugal parents for teaching them how to live modestly.

Watch out for fees, penalties and taxes. High fees can be a great return-killer. You should review and question every fee you pay, even on funds inside your 401(k). Amanda and Travis put much of their retirement money in low-cost ETFs and index funds. These paid off nicely, as the couple rode a more than 60 percent increase in the S&P 500 from 2012 until 2015.

The couple planned ahead and was able to avoid the 10 percent IRA early withdrawal penalty by using a Roth IRA conversion ladder. In this forward-looking strategy, they transferred a certain amount of money each year from their traditional IRA to a Roth IRA. Once five years had passed from the initial IRA to Roth conversion, they were able to tap the amount converted to their Roth in an annual laddered sequence and avoid the early withdraw penalty.

Simplify before retirement. As they approached their goal, Amanda and Travis sold much of the stuff in their two-story house.

Watch the outflow in retirement. While most conversations about retirement planning center in saving, you need to think carefully about your post-work spending if you want your nest egg to see you through 20 or more years.

Travis and Amanda are very disciplined about this. They stuck to their plan to spend no more than 4 percent of their portfolio’s current value per year. As a result, they sometimes had to cut back their monthly spending when the market dipped. They did so even while on their long-planned retirement adventure, a driving trip from San Francisco to Costa Rica. They made that journey in their frugal fashion, driving a used Toyota 4Runner that often doubled as their nighttime accommodations. When the couple arrived in Costa Rica, they leased a house for $1,000 a month — about $30 a night. They cooked most of their own meals and weren’t interested in expensive resorts or tourist activities.

Relocate and save. When Amanda and Travis returned to the U.S., they left the super-pricey Bay Area and bought a $270,000 house in Asheville, N.C. They chose the artsy mountain town because the cost of living is relatively low. They also believe it will be easy to rent the house during their coming summer travels.

Travis and Amanda insist they are done working. But they plan to have a family in the future. Their frugality is impressive, but the cost of kids is a game changer for any couple’s finances. So, we’ll see.

Again, this is an extreme example of achieving an early retirement. But if these two 30-somethings can accumulate about $650,000 in three years, surely you can achieve your savings goals in 20 or 30 years by adopting some of these same mindsets and tactics.

Hey, wait. We just learned a financial lesson from two millennials! Will wonders never cease?

Read the original AJC article here.


 

How To Hold Steady When The Market Swings

I vividly remember a book series from my childhood called “value tales.” Each book chronicled someone famous and a trait that personified their success.

Now, years later, I’m reading those same books with my kids. We just read “The Value of Humor,” which profiles the life of Will Rogers. Rogers’ prime years were during the Great Depression, a time during which he lent his humorous take on society as a writer, radio personality and comedian, bringing light to an otherwise dark period in U.S. history.

After explaining the meaning of the Great Depression to my oldest son, he said, “I hope that doesn’t happen to us.”

With the Great Recession only seven years behind us, I think that eternal seeds of worry have been planted in the back of most investors’ minds. After a bumpy 2015, we have had a record-setting rough start to 2016; and those seeds of worry that were planted years ago are starting to sprout.

With oil near $30 a barrel threatening U.S. jobs in the energy patch, China slowing down, tensions rising across the Middle East, North Korea testing H-bombs, and American politics in the throes of a heated race for the White House, I’m often asked how I can stay calm through all of these unsettling times.

For me, the answer is that I know I own quality stocks and bonds that both produce income. It’s that simple. But what does quality really mean? Here are three things that help me identify quality:

1. A diversified income stream. Meaning that the company isn’t a “one trick pony” and ideally has multiple lines of business selling into many different industries.

2. They haven’t borrowed too much. A Wall Street analyst would refer to this as having relatively low and serviceable net debt. This simply means they have no problem paying their bills and haven’t overextended themselves with debt.

3. They consistently make a profit. There are several metrics that measure profitability, namely net income and free cash flow.

It doesn’t take a Great Recession for a company to fall off the tracks — think about Blockbuster. It was a one-trick pony (movie rentals) that had borrowed too much money. In late 2004, its total market value was around $1 billion, while its debt level was a whopping $1.3 billion. By 2010, the stock had essentially fallen to zero; and today nearly all 9,000 Blockbuster stores are gone.

If Blockbuster has an antithesis, it’s Procter and Gamble. P&G is deeply entrenched in the global economy and generates almost $84 billion in revenue from about 80 core brands including Bounty, Charmin, Crest, Dawn and Gillette. They generate 20 times the cash flow required to service their debts and also pay a nearly 3.4 percent annual dividend. These qualities don’t mean P&G’s stock price doesn’t fluctuate, but I do sleep better at night knowing these facts about their business.

P&G is just one example of a company that checks all three of my quality boxes. I’m not saying it’s a stock you have to own or even want to own, but using these basic criteria as a guide helps give me the resolve to feel comfortable about what I own regardless of how the stock market is doing.

I’m sure Will Rogers would have found some humor in what’s happened so far in 2016, but he’s also the same guy who said, “Everything is funny, as long as it is happening to somebody else.”

 

Read the original article in AJC.


 

A Retirement Chart Sure To Give You Anxiety

I love how easily two-step charts are able to relay information to us. You look left, look right and then find your corresponding data point that reveals your answer. If only we could answer all of life’s tricky questions through a quick two-step chart.

The other day I shared JP Morgan’s 2015 Guide to Retirement chart on my Facebook page, and judging by the traffic, it clearly struck a chord. This particular chart tells you how to calculate how much money you should have saved for retirement based on your age and income level.

Taking a quick look at the chart, you might say, “Okay, I’m 35 years old and making $100,000, so I need to multiply $100,000 by 1.4. That’s a total of $140,000 that I should have saved (already). Good thing I started saving early and often”

An alternative ending to this might be, “Wait, WHAT!?! How am I already so far behind!?!”

According to Vanguard’s study released in 2014, How America Saves, their median participant retirement account balance was $31,396. The median participant age was 46 with an income of $75,000. According to JP Morgan’s chart, those participants should be clocking in with over $165,000 in savings already. That’s a difference of over $100,000!

Clearly there’s a disconnect between where the financial planning community says people should be, versus where people actually are.

Back in the real world, we’re seeing that most people are still struggling to save for retirement. According to a study released by the National Institute on Retirement Security in March 2015, 62 percent of working households between the ages of 55 – 64 have retirement savings worth less than their annual income. According to JP Morgan’s calculations anyone making above $50,000 a year should have at least three times their annual income saved for retirement by the age of 55!

In fact, this same study says that the median retirement account balance for households nearing retirement is $14,500. That’s truly terrifying!

Now after looking at both sides of this spectrum of savings, I have good news. There is hope!

There are plenty of surveys and financial planning articles that say that you’re supposed to have $1 million or even $2.5 million put away for retirement. While having either of these amounts would likely set you up for a comfortable retirement, the reality is that there’s no set number that everyone needs to reach for retirement. Just hearing numbers like this can be disheartening.

The real issue with retirement savings in America is that people are constantly bombarded with large savings goals that they “have” to reach to retire comfortably, so instead they just don’t save anything.

When doing the research for my book, You Can Retire Sooner Than You Think, I found that it was important for “happy retirees” to reach a minimum threshold of $500,000 in retirement savings. With that said, though, ultimately the real deciding factor in how much you need to retire depends on how much you need for spending each year once you stop working.

JP Morgan’s chart says that if you are currently making $400,000 a year while working, by the time you retire at age 65 you should have $6,640,000 in your retirement accounts. That’s assuming that during retirement you’ll still need 80 – 90 percent of that $400,000 forever.

What the chart seems to miss, is that by the time you retire you’ll hopefully own most of your larger assets outright; like your home, car, boat, and whatever else that you’re planning to enjoy in retirement. If that’s the case, then it’s pretty unlikely that you would need such a high percentage of your peak income year after year to be comfortable in retirement. It also means you don’t need to have that $6.6 million saved before retiring.

While I wish planning for retirement was as simple as following a chart, it’s better to actually know how much you plan on spending on a yearly basis in retirement. From there you can create your own retirement salary. A quick and easy way to do this is to head over to yourwealth.com, and use one of my favorite retirement calculators.

Don’t panic when people throw out crazy numbers in regards to what your nest egg should look like. Your own personal situation will have its own uniqueness with its own twists and turns. That’s why they call this personal finance, and why it will never be as simple as looking at a chart.

Read the original article here.


 

Robo Advisor vs. Digital Advisor

The robo-advisor: not since John Bogle came up with the idea for Vanguard in 1975 has a new development in the investment industry caused so much controversy and turmoil.

I can appreciate Wealthfront CEO’s position on his new robo competition from Charles Schwab. There are already dozens of media stories that detail the debate. I don’t want to argue about the minutia involved with each robo product offering. After all, every financial services company has a right to offer new products and evolve how they deliver investment services. However, here’s what the entire Robo Industry is missing: advice.

What neither Schwab’s nor Wealthfront’s new robo programs offer is real life advice in the form of a dedicated advisor. Ultimately, I believe both of these companies miss the true value that leveraging technology offers to the investment industry… providing better service to people who are relying on professionals to manage their life savings and offering individualized advice when faced with difficult financial decisions.

Pure robo-firms have lowered the cost to invest, the same way ETFs did back in the early 2000’s. That’s a good thing for investors. They haven’t, however, provided a better solution to deliver personalized advice to an extremely under-served area of the investor marketplace… the mass affluent, or those who have less than $1 million in investable assets.

The real future of investment advice for this group lies somewhere between what the Wealthfront and Vanguards of the world are offering, and what the full service brokerage houses are doing at places like Merrill Lynch and Morgan Stanley.

Study after study have shown very clearly and explicitly that for most investors the extraordinary push and pull of emotions tied to investment decisions is the real cost (or drag) on earning strong annual compounded returns over time. This is the reason that an option must exist in the middle of the robo and the traditional. That’s why my partners and I developed Wela.

Wela leverages technology to deliver a low-cost investment solution while also providing access to personalized investment advice. We’re a company with real people, using technology to make our jobs easier, and more importantly, to make our clients’ experience better, simpler, and comprehensive.

On the yourwela.com platform, there is no fee charged to our users who simply want to aggregate and monitor their investment accounts, cash accounts, real estate values, mortgage balances, etc. We do, however, charge a fee when one of our users raises their hand and says, “Wela, I need help with this account. Can you help me manage this piece of my financial equation?” Our average Wela client pays between 0.75% – 1%, and we use no proprietary ETFs or mutual funds. We use only what our Investment Committee and technology deem to be the best, low-cost investment solution depending on your specific situation.

Clearly I have a vested interest in spreading the word about Wela, what we deem as a Digital Advisor, not a robo investment solution. There are $20 trillion of investable assets in the US right now, and with such a large pie, there is plenty of room for all types of investment strategies. A portion of that pie will always use the lowest cost provider. In the investment industry, this means the majority of clients will end up talking to a call center when they have questions, and have their portfolios managed by R2D2. On the other end of the spectrum are the investors who will always need a full service financial advisor to consistently consult on all financial matters.

It is my belief that, over time, the biggest slice of the investor pie will likely employ a thoughtful combination of R2D2 and Harrison Ford, embracing technology while also maintaining a human element as they consume financial advice. We believe a company that is able to leverage technology to more efficiently serve a broader group of people with more personalized service is ultimately going to stand the test of time.

Read the original article here


 

One Secret To Retiring Sooner

As people have really dug into my new book over the last few months, You Can Retire Sooner Than You Think: The Five Money Secrets of the Happiest Retirees, I’ve had a common question come back to me:

“Given the fact that people are already living longer, requiring a longer draw-down period from their nest egg, how do you reconcile people retiring even earlier?”

It reminds me of the quote, “No man on their deathbed says, I wish I had worked more.”

My answer to this may sound a little grim but it’s realistic. While as a whole people in the US are living longer, it doesn’t guarantee that we’ll all live to age 100.

I have known too many wonderful people who spent years planning their retirement, but when they finally reached their “golden years” they sadly passed away unexpectedly just a few short years into their perfectly planned retirement.

Of course none of us knows exactly how long we will be on this earth. If we did know, retirement planning would be much easier. This leaves people with the difficult decision of retiring with the fear of possibly running out of money, or potentially missing out on the ability to enjoy retirement altogether. That’s why I suggest that if you’re looking to retire early, you might want to consider phasing into retirement.

Rather than diving straight into the retirement pool, you can wade in by first moving to part-time work. By continuing to work you may be able to stop saving for the future while also not spending from your savings. Just working part-time will give you more of the free time you’re looking for in retirement, but delays when you have to start using your savings.

Traditional retirement planning is often seen as black and white. Meaning you go from full speed building your nest egg to full speed spending your nest egg. By instead moving to part-time work you’re able to have more freedom with your time while also extending the life of your nest egg.

Think of this phase as your retirement happy hour before the party really starts.

It’s helpful to start planning that move to part-time work a few years out, before actually enacting it. While for many careers it may simply be a matter of reallocating priorities and cutting back, there are careers that do not easily offer part-time work. If that is your position, use the few years beforehand to start thinking through and planning your part-time career move.

Ideally, your part-time work just needs to cover your monthly expenses, so you may be able to switch to a new field. You could even take up a hobby as a part-time gig. If you’re crafty, enjoy woodcarving or have other skills like this, consider opening an online Etsy store. If you love shopping you should consider applying to work at your favorite store. On top of a job you’ll likely get an employee discount. You should be realistic, though. It’s probably pretty tough to get paid to go fishing or to watch college football.

An important happiness pillar from my book’s research stems from retirees participating in many different “core pursuits” also known as hobbies on steroids. If you can find a way to get paid while enjoying your core pursuits, then all the better.

Everyone seems to know someone who died too young to enjoy the money they had diligently socked away for retirement. I’ve personally seen it too many times to ever recommend that anyone stay somewhere they don’t love when they could potentially move to the next phase. Rather than focusing on continuing to build your nest egg, just be sure you’ve reached some of the benchmarks I’ve outlined before, and then get creative with how you ease into retirement.

Remember, it’s five-o’clock somewhere.

Read the original article here.


 

6 Financial New Year Resolutions You Need To Make For 2015

Okay guys, we’re officially a few days away from 2015, so it’s time to put your pen to paper and write out your New Year’s resolutions. I’m a big fan of this tradition because I think we all have areas in our lives that can be improved with a little work. While many people have their eyes on getting into better physical shape, I would suggest also getting in better fiscal shape in 2015. Here are some resolutions you can make that will set you up for success, and if your other resolutions don’t hold up (because who really wants to go to the gym in March anyway?) you can at least point to having achieved these!

 

Make A Budget

Budgets are a great tool that can keep you on track to reach your financial goals. They also raise a red flag for you when you might be overspending, or let you know when you might end up with some extra cash at the end of the month. When building a budget you’ll need to first list your income streams and then your expenses. Over the course of a year, your expenses should be lower than your monthly net income stream. If not, then you’ll need to figure out how to either lower your expenses or up your income. When building out your budget remember to pay yourself first, meaning you should have a line item for savings. For tips on creating a budget, check out my article here.

 

Fill Your Emergency Savings Bucket

Do you have enough money in your emergency fund right now? You should have enough money to pay for six to twelve months of your fixed expenses. If you don’t have that amount right now, that’s where your savings should go first before saving for a vacation or even paying down debt. You should also keep this money so that it is easily accessible, like a savings account or money market. This money should only be used for true emergencies such as job loss or medical costs.

 

Pay Down Debt

Debt isn’t always a bad thing. Taking on debt to buy an asset that can grow in value like a house or a business is typically a good bet. However, there’s definitely “bad debt” that you should try to pay off as quickly as possible. If you have non-essential debt in your life from credit cards, or personal loans, etc., you should develop a one to 5 year plan to pay them off. One suggestion that I’ve seen help many people is to actually start with paying off your smallest debt first, then snowball up to paying off your largest debt. That way you can quickly see progress in eliminating even some of your smaller balances. This progress will serve as a motivator to continue the journey to becoming debt free.

 

Save For Your Big Events

We can’t prepare financially for everything, which is why having emergency savings is so important. However, there are many things that we can plan and save towards, so take a look at your upcoming plans for 2015 (and maybe 2016 and 2017), and think through any life events you have coming up. If you’re thinking about paying for a wedding, having a baby, saving towards college or starting your retirement savings, these are all things you can build into your budget. Once you’ve built up your emergency savings and your debt is under control, you can allocate extra money to some of these important life events.

 

Spend at least One Hour per Month on Financial Planning

Most of these above mentioned resolutions revolve around utilizing the budget you’ll set up today, but we all know things don’t always go as planned. You might find yourself needing to get your car repaired one month, or you’ll need to put some money towards a birthday gift the next. Rather than getting frustrated and just giving up on your budget all together, instead, plan on spending at least one hour either at the beginning or end of the month looking over your finances to tweak them so that you’ll stay on track, despite surprise expenses.

In research for my recent book, You Can Retire Sooner Than You Think, I learned that the happiest retirees spent at least five hours a year planning their retirement. That means you just need spend at least 25 minutes each month thinking through your retirement plan, your budget, and your overall financial goals. Then you’ll be in great financial shape and set yourself up for a happy retirement!

 

Budget For Fun

Financial planning and budgeting isn’t about depriving yourself from every joy in the world. So, I like planning for fun. Put it in the budget, and plan for it. That way, when it comes time to spend money on something that you love to do, you won’t feel guilty about it because it’s already in the budget! So, go enjoy a dinner out with your significant other, or catch a concert with some friends.

 

Bottom Line

The real trick to being successful with New Year’s resolutions is to set attainable goals. The above ideas for financial resolutions should be adapted to fit your situation, and help get you on the right path to financial freedom. Happy New Year!

 

Read the original article here.


 

3 Ways To Avoid Being Part Of The Upcoming Retirement Crisis

I ran across an interesting article this week from the Boston Globe with another dire warning about retirement in America. It profiles the work of Alicia Munnell, a former top economist at the Federal Reserve Bank of Boston who is now the head of Boston College’s Center for Retirement Research. At the age of 71, she has just released a new book (adding to her impressive collection) which focuses on my favorite subject, retirement. The title of her book is, “Falling Short: The Coming Retirement Crisis and What To Do About It.” In it, she is pushing the idea that it’s just not realistic anymore for people to plan on being able to retire at age 62, and start walking on the beach while holding hands.

Munnell’s argues that most Americans should push the retirement age to 70, so that retirees can fully “max out” what their social security payments will be. She is assuming that due to a lack of savings in America, most Americans are going to have to rely on Social Security – hence the importance of maximizing the amount (with the caveat of working longer).

What’s the unsettling reality of the Social Security system? Without any changes to the current system, the social security trust fund surplus will run to zero, and the government will likely have to reduce payments either across the board or for certain groups.

On top of social security’s issues, Munnell’s other factor leading to the retirement crisis is the slow death of the pension. In 1983 almost two-thirds of workers had some kind of traditional pension plan with a lifetime of income guaranteed. In 2013, though, less than one in four people now have pension plans. Hence, those relying only on 401k savings have increased from 12% to 71% since 1983.

While a pension plan guaranteed retirees a set monthly income based on a percentage of their previous income from the company, now, according to Munnell, the typical household approaching retirement only has around $111,000 in retirement savings which translates into about $400 a month.

I love parsing these statistics – even though some of them might be dire. This might come across as depressing news, but I believe they’re important for all of us to understand so that we can learn how to identify the warning signs and avoid ending up being a statistic.

With all that said, I also believe part of the problem people have with saving for retirement today is that Americans are hearing seemingly impossible and ultimately unattainable retirement benchmarks from Wall Street and the media.

A message of “never enough,” and “work forever” are counterproductive in my opinion for the problem we all face with retirement. That’s why I like to focus on the bare minimum financial benchmarks that everyone can target without feeling like they’ve lost before they’ve even started.

In Munnell’s book, she outlines four main strategies for people to not run out of money in retirement:
1. Work until age 70
2. Save more
3. Pass on less to your heirs

These three strategies are good “common sense” approaches, but let’s look at some of the realities behind them.

If you have zero savings for retirement, then of course you’ll have to work as long as humanly possible and at least until age 70. Based on my personal experience, though, 75% of the people I have worked with over the years are in no way interested in working full time until the age of 70.

Rather than taking Munnell’s approach, I would suggest you aim for the ability to stop working full time at age 62. Then, if you are able, work just enough part time so that you don’t have to tap into your savings. This will allow your savings to continue to grow until age 65 or 66. At that time you can also being taking your social security payments which will also have had time to grow.

For Munnell’s second point on saving more, I think that’s a no brainer. However, I think it’s important that you have a reasonable and attainable goal on the horizon. That way you at least start and stay on your savings journey. Just saying “save more” is too ambiguous of a strategy. In the research for my book I found that happy retirees typically have at least $500,000 saved for retirement. If that’s not realistic for you, though, remember that you should have $240,000 saved to pull $1,000 per month from your portfolio.

As far as leaving less money to heirs, I actually agree. With so many people having virtually zero savings, leaving millions to your kids is a rare luxury. I believe that not being a burden to your children is gift enough.

Bottom line
Here is my update to Munnell’s list:
1. Understand what you need for your monthly budget in retirement above what social security is going to provide; and map out other income streams to “fill the gap”
2. Hit $500,000 in savings for retirement
3. Have a plan to eliminate your mortgage by the time you’re ready to retire

The retirement crisis might be coming, but by reaching the above goals, you won’t be a statistic.

Read the original article here.


 

The Morbid State of Retirement in America

1 in 5 American’s would rather die than run out of money in retirement and other unsettling retirement findings for the middle class.

Wells Fargo released a survey at the end of October that studied “middle-class” American’s feelings on retirement, and the results were shocking. 

The survey polled just over 1,000 people between the ages of 25 to 75 with household income ranges between $25,000 to $99,000 per year. This immediately grabbed my attention because the survey group overlaps with some of the research for my book, You Can Retire Sooner Than You Think.

From Wells Fargo’s research there were a few significant results that were particularly nerve-wracking. The first was that almost half (48%) of all the non-retirees in this study are “not confident” that they have saved enough to live the life they want in retirement. What’s more is that this lack of confidence jumped up to 71% for people between the ages of 50 and 59!

Half of the group in their 50’s said that they will have to work until they are at least 80-years-old due to their lack of savings. That’s 18 years after you can start collecting social security!

According to the study, one in five people said that they would “rather die early” than not have enough money to live comfortably in retirement. For people in their 40’s and 50’s, one in three of these folks get depressed when just thinking about their financial life in retirement.

All of these reactions and statistics are unsettling. There are just too many people, half of the people in middle-class America, who are apparently planning to work until they die.

The surveyed group also reported that they believed that $250,000 saved for retirement would be enough to be “comfortable”, but the median amount that they are saving is $125 a month. If you do the math — $125 per month for 30 years is $45,000. If the funds are invested and earn 5 percent per year, that’s still only about $100,000. That’s $150,000 below this group’s goal! What’s worse is that in my research I found that happy retirees typically have at least $500,000 saved for retirement. That’s double what the survey respondents seem to think will give them a comfortable retirement, so $100,000 clearly doesn’t cut it.

If you’re asking yourself, “Could this be me?” then it’s time to take a hard look at your own retirement planning.

 

Quick Breakdown Of What To Avoid

• The group’s median amount saved for retirement was $20,000. That is down from $25,000 the prior year’s survey from 2013. It’s also way below their goal of $250,000, and extraordinarily lower than the minimum benchmark of $500,000 I suggest aiming for.

• Ages 50 – 59 are the peak years for saving for retirement, but 41% of the people in this age range in the study said they were saving absolutely nothing. Zero. Don’t fall into this group.

• In this survey 61% of the entire group admitted that they were not sacrificing “a lot” to save. You can sacrifice spending or pick up extra work, but you need to be doing something to set yourself up for a comfortable retirement.

• An overwhelming majority, 72%, of the group surveyed said that they should have started saving earlier. Hindsight is 20/20, so learn from those who already have it, and start saving today. There’s no time like the present.

 

Bottom Line

I’m not saying that saving for retirement is necessarily easy, but it is possible. In my book, You Can Retire Sooner Than You Think , I give you all the financial bare minimums that you should shoot for to be a happy retiree. These are the numbers you should be planning and saving towards. Don’t just plan to work until you die. Instead, plan and save now, so you can actually stop working before you’re 80 and enjoy life.

 

You can find Wells Fargo’s original article on their research here.

Read the original article here.


 

CIA Success Story

In today’s CIA Success Story, we share a story about a recently retired airline employee who wanted to figure out how he could continue to afford his current lifestyle throughout retirement. He had a specific interest in working with us to come up with a strategy that would allow him to generate multiple streams of income during retirement. His goal was to use his investments as a source of additional income as he prepared for life after retirement.

 

The Question

How can I generate multiple streams of income from my investments?

 

The Scenario

The recently retired airline employee decided to roll his 401(k) over to his IRA. From there, he needed help in evaluating what more he could do with his investments to supplement his current lifestyle in retirement. He came to us wanting to figure out how to create multiple streams of income. 

 

How We Helped

After numerous personalized meetings and working together, we were able to show this retiree how to generate a specific income off of his investments and feel confident in knowing that the income would supplement his lifestyle throughout retirement. The option recommended for this retiree was to look at an income investing strategy. After determining the amount of cash he needed to cover emergency expenses, short-term cash funding needs and SWAN (Sleep Well at Night) cash; we evaluated his portfolio to determine if his investments would be in a “Growth” or “Income” bucket, and we assessed the level of risk.

 

If you currently find yourself in a similar scenario, here are a few questions to ask an advisor:

1. When is the best time to roll over my 401(k) to a IRA?

2. How much money do I need to live off of for a happy retirement?

3. How can I develop a personalized income investment strategy?

 

Preparation for Retirement

Never feel that you are alone going through this transition to retirement. If you are anxious and need a secure income investment strategy, we are trained and committed to guide you step-by-step through the process. If you aren’t ready to meet with an advisor, you can do your own research but make sure you get information from reputable sources.

 

The Takeaway

This retiree trusted the knowledge of our team, and now feels confident with generating multiple streams of income while fully retired. Over the past year, he learned how to supplement his income and live comfortably. 


 

Retirement Planning – Moving Invested Funds

Q: I am a fireman in Georgia. I am 49 years old and plan on retiring sometime in the next few months. I have a 457 retirement plan that I have been putting money in since 1992. In the past, my employer has given us two companies to pick from to put this money into. I have been putting money into the same company all of this time. Now, my employer is changing to a different company and they have plans to move 100% of our balance into a new and different company that will be administering the my employer’s 457 plan. The money will be going into a comparable fund to what I am in now, but not the exact fund. I actually have two questions about this:

 

1. Since this 457 money is mine and 100% of has been money that I have put into it, can they legally make me change to a different company?

 

2. If I do have to change to a different company, wouldn’t that really mess up all of the ‘dollar cost averaging’ I have been doing since 1992?

 

 

A: Thanks for reaching out with your questions and congrats on being so close to retirement.

 

First off, retirement plans do change from time to time and the money typically has to be moved. Usually the new plan will offer similar options and it sounds like that is the case here, even though it’s not the exact fund. It is probably worth asking if you are allowed to do an early rollover…otherwise known as an in-service rollover, and move it into an IRA. That way you’ll really open up your investment options.

 

As far as dollar cost averaging is concerned, moving the money should not have a negative impact on you. The key is to keep the money tax-deferred as well. But in your case, assuming all the money is pre-tax, it will be taxed at your income rate as you pull it out.


 

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