In Monday’s retirement planning article, we encouraged you to account for all aspects of retirement, consider alternatives, and be flexible as your needs change. If your retirement plan doesn’t include contingencies that account for changes in your life and finances, you may not be able to reach your financial goals or retire when you plan on retiring.
This has become the reality of many “Baby Boomers” (people born between 1946 and 1964) recently. According to LiveScience’s 2012 infographic “Retiring Boomers,” only 42% of retired Baby Boomers retired when they thought they would. 51% retired earlier than expected while 8% retired later than they had planned. Continue Reading »
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Can you picture your retirement? Do you know where you will live and can you imagine the kind of things you will be doing? Or is retirement just a vague idea that you’re striving for?
It’s important to save for retirement as soon as you enter the workforce. Your investing power is always stronger today than it is tomorrow, and there are plenty of ways to start saving and investing for retirement. But how much money will you need in your retirement? That depends on a variety of factors. Some things, like living arrangements, you can plan for. However, there will be unknowns until you are in or near retirement: things like healthcare and taxes. And of course, things can change over time.
However, don’t let uncertainty and the possibility of change deter you from making a plan. A good plan should:
- Identify your goals and objectives (what do you want your retirement to look like?)
- Account for all aspects of retirement: where you will live, a budget for fixed expenses, taxes, hobbies/entertainment, transportation, healthcare costs, remaining debt, etc.
- Explore your alternatives (be flexible to move with your changing needs)
- Employ the best ideas to meet your needs and achieve your goals
Once you have a plan for retirement, estimate the annual cost and use that number to calculate your “retirement number” – the amount of money you will need saved by the time you retire to pay for your retirement (there are many calculators online available for this). Remember: this number is just an estimate and things can change. If you have a realistic retirement plan and are ready and willing to make adjustments to that plan, you can be more confident in your finances as you near retirement.
For more retirement planning information, visit Retirement Central, or feel free to contact us or leave a message below.
Have you given your retirement any thought? If so, what would you like it to look like?
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People end up in debt – and stay in debt – for many different reasons. For some, debt wasn’t a choice: maybe there was a medical emergency or a loss of income. Others simply chose debt: to pay for school or buy a home or car, for example.
Debt can can linger for a long time, tying up your income for years and years. To limit the effects of debt and to free up your money for your financial goals, you’ll need a plan to eliminate it. Here are three suggestions.
The 20% payment plan isn’t so much a specific method as it is a budget guideline. In this plan, 20% of your net income (income after taxes) goes towards debt (not including mortgage or rent). 10% is saved and the other 70% is used for the rest of your expenses. So if your net annual salary is $40,000, $8,000 ($667 a month) should be dedicated to paying off debt every year and $4,000 should be used to build a savings fund. Continue Reading »
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Financial institutions pull up credit reports on their potential borrowers to help them determine the details of a loan — and whether or not to offer a loan in the first place. But what exactly are they looking for when they review credit reports?
Daily Finance shares some insight in their slideshow: “5 Ways Every Credit Customer is Judged.” They explain five different aspects of your credit lenders may be interested in, and even suggest a few ways to improve those parts of your credit history.
Have you reviewed your credit history recently? If not, check out our recent articles on ordering your credit reports annually and FICO scores for more information.
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According to Nerd Wallet, the national average credit card debt is $15,216; the average mortgage debt is $148,443; and the average student loan debt is $32,054. Even if your debt isn’t as high as these averages, it can still wreak havoc on your finances.
Perhaps your debt payments are affordable. However, that doesn’t mean you’re in a financially healthy situation. Calculating your debt-to-income ratio (DTIR) can help you determine if you’re taking on too much debt. Your debt-to-income ratio is the percentage of your gross income that is tied up in debt. To calculate it, divide your monthly debt payments (mortgage/rent, student loan, credit card bills, etc.) by your monthly gross income and multiply it by 100 to get your DTIR as a percentage. So, if your monthly debt payment is $1,500 and your monthly gross income is $3,000, your debt-to-income ratio is 50% ($1,500/$3,000 x 100 = 50). Generally, anything over 36% is considered risky: a high DTIR will impair your ability to save and make it difficult to recover from a financial emergency. Continue Reading »
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