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So far Park-Elm has created 193 blog entries.

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.

Video series: Why Should I Invest?

By | July 25th, 2019|Markets|

In this first short video, Nobel laureate Eugene Fama explains two key steps to investing: knowing why you want to invest and understanding your tolerance for risk. Everyone has different reasons for investing and different risk aversions. Stay tuned for  our 3 part series on risk, rewards and markets.

 

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 #4 – Retirement Savings Checkpoints!

By | July 15th, 2019|Markets|

2019 Guide to Retirement
Achieving a financially successful retirement requires consistent savings, disciplined investing and a plan, yet too few Americans have calculated what it will take to be able to retire at their current lifestyle.  This chart from JP Morgan Asset Management ( for household incomes of $100,000 or more) helps investors to quickly gauge whether they are “on track” to afford their current lifestyle for 30 years in retirement based on their current age and annual household income.  This analysis uses an appropriate income replacement rate (detailed on slide 15), an estimate of how much Social Security is likely to cover and the rate of return and inflation rate assumptions detailed on the right to determine the amount of investable wealth needed today, assuming a 10% gross annual savings rate until retirement.  It is important to note that this analysis assumes a household with a primary earner who plans to retire at age 65 when the spouse is assumed to be 62.  If an investor’s current retirement savings falls short of the amount for their age and income, developing a written retirement plan tailored to their unique situation with the help of an experienced financial advisor is a recommended next step.

Call our office for a complimentary Retirement Savings and Distribution review.

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%.

QUARTERLY MARKET REVIEW – Q2 2019

By | July 5th, 2019|Markets|

Click on the link below for a detailed analysis of quarterly performance of the global equity and fixed income markets.

CLICK HERE TO READ THE 2ND QUARTER 2019- QUARTERLY MARKET REVIEW

 

Retirement Insights Tip #2: Longevity Risk – How can we Prepare?

By | June 24th, 2019|Markets|

Life expectancies in the United States continue to increase as more people are living to older ages than ever before.

Investors need to plan on the probability of living much longer – even 30+ years in retirement. It’s important to invest a portion of your portfolio for growth to maintain purchasing power over longer periods of time.

Discuss a Distribution Strategy with your financial advisor. Outliving your money is a real concern for many investors. If you are in good health, or have a family history of longevity, you much plan for living beyond average!

This chart shows the probability that 65-year-old men and women today will reach various ages. For a 65-year-old couple, there is nearly an even chance that one of them will live to age 90 or beyond.

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!

Trillion Dollar Club

By | June 10th, 2019|DFA, Dimensional Fund Advisors, Markets|

For 20 years, we have utilized Dimensional Fund Advisors to facilitate intelligent product selection, and our philosophy parallels their approach of information based, efficient investing.

The Financial Times recently sat down with Dimensional Co-CEO and Chief Investment Officer Gerard O’Reilly. The interview covers O’Reilly’s path to Dimensional, his leadership alongside Co-CEO Dave Butler, and the firm’s research-based culture and approach to investing.

An interesting piece about one of DFA’s own, and his path to Dimensional. Read below or click HERE to go directly to Dimensional’s Web site.

 

dimensional-eyes-the-fund-sectors-trillion-dollar-club

 

 

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