The first step toward financial security in retirement is understanding your current financial situation and savings options. Retirement is a significant period in your life which requires a significant bankroll. Whatever your age, finances or savings experience, now is the time to get started. The earlier you start the better off you’ll be when it’s time to retire.
Imagine quitting your job today. How much would you need in your savings, investments, IRAs and retirement plans to support your current lifestyle for the next 20, 30, or even 50 years or more? Add the costs of inflation and health care expenses, and it’s likely a sobering thought. Continue Reading »
Posted in Feature | Tagged Financial Planning, Retirement | Leave a Comment »
Click on the image to see the entire infographic.
Unhealthy lifestyles, habits, and choices can hurt your wallet, not just your mind and body. But just how much do these things cost? Mint’s latest infographic gives us an idea. Click here or on the image above to see the average annual cost of eating junk food, drinking caffeine, smoking, and other unhealthy activities cost.
As you can see in the infographic, the financial ramifications can really add up. Of course, unhealthy lifestyles can have a cumulative effect on your body, too — which in turn, can lead to more spending. According to the infographic, the average spent on junk food, energy drinks, and soda is over $2,800; a steady diet of these things can lead to diabetes (insulin: $3,600) and/or dental work (root canal: $1,200).
Do you have any unhealthy habits or consistently make unhealthy choices? How much do you think these cost you?
Posted in Charts and Graphs | Tagged Personal Finance, Savings | Leave a Comment »
Asset allocation is the process of deciding the right mix of asset classes for your investments. Appropriate asset allocation balances risk and how well you can tolerate it against your long-term and short-term goals.
The performance of the assets in your portfolio will affect the asset allocation over time. For example, stocks might make up 60% of your portfolio when you begin investing, but after five years of solid returns, that number could change to 70%, changing the risk level of your portfolio as a result.
Rebalancing brings your portfolio back to its original asset allocation. But before you rebalance, ask yourself these questions:
Have your risk tolerance or goals changed? Continue Reading »
Posted in CTC Tips | Tagged Investing | Leave a Comment »
Hello to you!
We recently put April 15th and tax returns behind us, and maybe thought happily we wouldn’t have to think about the topic for another year. However, before you put the tax file in the drawer, let’s take this opportunity to see if there is any action to be taken today to positively impact the tax situation next year.
First of all, did you owe money to the government? If yes, did you have to pay a penalty for underpayment? It’s a good idea to check today to see if you are having the appropriate amount withheld from your paycheck or your pension, annuity, or IRA distribution checks. If you would prefer not to have withholding from these distributions, you can make quarterly estimated payments into the IRS instead. The goal is to have enough on deposit with the IRS so that you do not get penalized for underpayment.
Did you get a large refund from the IRS? If so, it would be a good idea to check to see if you are having too much withheld from your check. There is no reason to deposit more with the IRS than you need to.
Has there been a major event in your life, like the death of a spouse, a new marriage, or a new baby? These life changing events do have an impact on your tax situation, so it is important to review your withholding or estimated tax payments with your tax preparer if you experience significant change.
Did your IRA required minimum distribution put you into a higher tax bracket? If you are over 70 ½ , you can have your IRA custodian make your gifts to charity directly from your IRA (up to $100,000). The distribution then would not be considered as taxable income to you.
If you have thoughts you would like to share, please feel free to contact us or leave a comment below.
Ann P. Wiesbrock, CFP®
Posted in Letter from our President | Tagged Charitable Giving, Retirement, Taxes | Leave a Comment »
Perhaps financial goals such as building an emergency fund, paying off debt, or saving to purchase a home are your priorities right now. While these are important goals to work towards, don’t lose sight of the need to save for retirement.
Consider these retirement numbers published by Statistic Brain.
|Average retirement age
|Average length of retirement
|Average savings of a 50 year old
|Total cost for a couple over 65 to pay for medical treatment over a 20 year span
|Percentage of people ages 30-54 who believe they will not have enough money put away for retirement
|Percentage of Americans over 65 who rely completely on Social Security
|Percentage of Americans who don’t save anything for retirement
|Total Number of Americans who turn 65 per day
|Percentage of population that is 65 years of age or older
According to this table, the average savings of a 50-year-old is almost $44,000. Let’s assume that this amount was saved over 20 years, giving us a savings rate of $2,200 a year. At that rate, a couple will have $154,000 saved by the time they reach 65. Yet the cost for a couple’s medical expenses alone is $215,000 over 20 years.
Of course, these numbers are for the “average” person/couple. But consider your current retirement savings plan. Or, what if you haven’t started saving for retirement yet? Will you be able to cover medical costs during retirement if they are that high? What about all of your other costs during retirement?
The uncertainty of retirement makes planning for it difficult. However, don’t let that keep you from saving for it. In fact, the uncertainty of retirement is all the more reason to save. So save as early and as much as possible. As your retirement needs become clearer, you can adjust your savings plan accordingly.
For an idea of how much money you might need for retirement, check out Statistic Brain’s savings chart below. To see the rest of their stats on retirement, visit their retirement statistics page.
|Amount Needed in Savings For Retirement
Monthly income need
Savings Needed for 20 Years
Savings Needed for 30 Years
|The above sums assume your portfolio will earn a 6 percent annualized return during the course of your retirement and endure 2 percent annual inflation erosion.
Posted in Charts and Graphs | Tagged Retirement, Savings | Leave a Comment »