Video series: Retirement Readiness #1 – Monitoring Your Progress

By | November 14th, 2019|Dimensional Fund Advisors, Markets, retirement|

When planning for retirement, it’s important to keep in mind how much spending your savings can support. The decisions you make today can help improve your retirement readiness.

Beyond determining how much money to save, it’s useful to think about retirement in terms of how much income you’ll need after you stop working. Dimensional’s My Retirement Income Calculator can help give you a sense of how much income your savings could provide in retirement.

Enjoy our Retirement Readiness series to help you set and achieve your retirement goals.

Announcing our Retirement Services Division

By | November 5th, 2019|retirement|

Grimme release

Kids’ future or yours? 6 Tips to Balance College and Retirement

By | October 8th, 2019|College Planning, retirement|

Get the facts about saving for retirement and college at the same time. Understanding that funding each is equally important, and that even a late start is a good start. Every dollar saved is a dollar you don’t have to borrow.

IND_Flyer

The Secret of the Solo 401(k)

By | August 29th, 2019|retirement|

Self-employment has may perks, but there’s at least one significant drawback: the lack of an employer-sponsored retirement plan like a 401(k).

We have a solution for you!

The solo 401(k) is designed for self-employed workers with no employees, and mimics many of the features of an employer-sponsored plan.

THE BASICS:

  1. Save up to $19,000 (over 50? Make that $25,000)
  2. Profit sharing options of up to 25% of income on top of the 19k
  3. Flexibility – rollover, roth, loan options
  4. High earners can take advantage of a supersized pension option of up to 100k

Interested?

Check out our Solo 401(k) ebook here and contact us today!

Rising annual health care costs in retirement

By | August 21st, 2019|retirement|

Health care is traditionally one of the largest expenses in retirement. Planning for these costs, and keeping up with it as you age is crucial.

Given variation in health care cost inflation from year to year, it may be prudent to assume an annual health care inflation rate of 6.5% which may require growth as well as current income from your retirement portfolio.

This chart illustrates the current out-of-pocket health care costs experienced by today’s 65-year-old, and how those costs may increase over time. These costs include traditional Medicare with a Medigap Plan G, which is fairly comprehensive. Supplemental policies, called Medigap, fill in gaps in Medicare coverage such as co-pays and deductibles but not for most prescriptions. Part D for prescription drugs and out-of-pocket expenses are also included. Median costs are about $5,160 per person. These costs are projected to more than triple over 20 years for three reasons:  1) higher than average inflation for health care expenses; 2) increased use of health care such as drugs at older ages; and 3) Medigap premiums that increase not only with inflation but also due to increased age. It is important to note that these costs do not include most long-term care expenses.

Retirement Insights Tip #6 – Changes in Spending

By | July 29th, 2019|Markets, retirement|

Spending habits change over time. Typically, spending peaks at the age of 45 and starts a slow decline. This is an important piece of the retirement planning puzzle. We often talk about distribution strategies at retirement age. A solid estimate of spending is necessary to strategize for your future.

This chart illustrates what college-educated households spend on major expenditures at specific ages. Most Americans’ peak spending years are between ages 45 and 54, and thereafter spending tends to lower at older ages. Note that the largest expenditure category at all ages is housing, while the category that older people spend significantly more on than younger people is health care.

Retirement Insights Tip #5: The Power of Tax Deferred Compounding

By | July 22nd, 2019|irs, retirement|

Deferring the tax on investment earnings, such as dividends, interest or capital gains, may help accumulate more after-tax wealth over time than earning the same return in a taxable account. This is known as tax-deferred compounding. This chart shows an initial $100,000 after-tax investment in either a taxable or tax-deferred account that earns a 6% return (assumed to be subject to ordinary income taxes). Assuming an income tax rate of 24%, the value of the tax-deferred account (net of taxes owed) after 30 years accumulates over $79,000 more than if the investment return had been taxed 24% each year.

Choosing to shelter investment growth in tax-deferred accounts over the long term may result in more wealth for retirement. The value of tax deferral in this example is equivalent to a .7% higher annual return over the time period. TAXES CAN WAIT!

Retirement Insights Tip #3: Social Security Timing

By | July 9th, 2019|retirement|

Deciding when to claim benefits will have a permanent impact on the benefit you receive. Claiming before your full retirement age can significantly reduce your benefit, while delaying increases it. In 2017, full retirement age began transitioning from 66-67 by adding 2 months each year for 6 years. This makes claiming early even more of a benefit reduction.

Surprisingly few Americans understand the benefits and trade-offs related to claiming Social Security at various ages. The top graphic illustrates these trade-offs for people who are currently 65 and older whose full retirement age (FRA) is 66. Delaying benefits results in a much higher benefit amount: Waiting to age 70 results in 32% more in a benefit check than taking benefits at FRA. Likewise, taking benefits early will lower the benefit amount. At age 62, beneficiaries would have received only 75% of what they would get if they waited until age 66. FRA for individuals turning 62 in 2019 is 66 and 6 months, and it will continue to move 2 months every year until 2023, when it will reach and remain at age 67. The Social Security Amendments Act of 1983 increased FRA from 65 to 67 over a 40-year period. The first phase of transition increased FRA from 65 to 66 for individuals turning 62 between 2000 and 2005. After an 11-year hiatus, the transition from 66 to 67 will complete the move.

The bottom graphic shows the trade-offs for younger individuals, which will penalize early claiming to a greater degree. The percentages shown are “real” amounts – cost-of-living adjustments (COLA) will be added on top, providing an even greater difference between the actual dollar benefits one would receive. The average annual COLA for the past 34 years has been 2.6%.

RETIREMENT INSIGHTS TIP #1 – SAVE AND INVEST EARLY!

By | June 20th, 2019|retirement|

 

HOW EARLY AND FOR HOW LONG?

Make saving for retirement a priority by investing early and often. This graph illustrates the savings and investing behavior of four people who start saving the same annual amount at different times in their lives, for different durations and with different investment choices.

Be Consistent! Start Early! Be A Disciplined Investor!

The power of compounding is key to success! You have to participate in the markets to be rewarded! Investing in tax sheltered vehicles can lead to even greater wealth. Stay tuned for discussions on savings rates and Qualified v. Non-Qualified. Today’s take away – start investing NOW and determine a level of risk that is acceptable to you!

Retirement Insights Series

By | June 19th, 2019|Markets, retirement|

THE RETIREMENT EQUATION

A sound retirement plan is to make the most of the things that you can control but be sure to evaluate factors that are somewhat or completely out of your control within your comprehensive retirement plan.

Investment efforts are best directed toward areas where we can make a difference and away from things we can’t control. We can’t control movements in the market. We can’t control news or financial headlines. No one can reliably forecast the market’s direction or predict which stock or investment manager will outperform.

But each of us can control how much risk we take. We can diversify! We do have a say in the fees we pay. We are in charge of our savings rate and spending, and we can exercise discipline when our emotional impulses threaten to blow us off-course.

This can be difficult for most people, because we are pushed toward fads that the financial marketing industry decides are sellable, which require us to constantly tinker with our portfolios.

That’s why we’ve created a Retirement Insights Series help you focus to the controllable things. Breaking down the road to retirement one step at a time! Stay tuned for a new topic each week in the series!

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