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It Isn’t Too Late to Save for Retirement

December 23rd, 2013 | No Comments | Posted in Financial News

If you’re 40 or 50 and haven’t begun, you must make the effort.

shutterstock_126190952Some people start saving for retirement at 20, 25, or 30. Others start later, and while their accumulated assets will have fewer years of compounding to benefit from, that shouldn’t discourage them to the point of doing nothing.

If you need to play catch-up, here are some retirement savings principles to keep in mind. First of all, keep a positive outlook. Believe in the validity of your effort. Know that you are doing something good for yourself and your future, and keep at it.

Starting later means saving more – much more. That’s reality; that’s math. When you have 15 or 20 years until your envisioned retirement instead of 30 or 40, you’ve got to sock away money for retirement in comparatively greater proportions. The good news is that you won’t be retiring strictly on those contributions; in large part, you will be retiring on the earnings generated by that pool of invested assets.

How much more do you need to save? A ballpark example: Marisa, a pre-retiree, has zero retirement savings at age 45 and dedicates herself to doing something about it. She decides to save $500 each month for retirement. After 20 years of doing that month after month, and with her retirement account yielding 6% a year, Marisa winds up with about $225,000 at age 65.1

After 65, Marisa would probably realize about $10,000 a year in inflation-adjusted retirement income from that $225,000 in invested retirement savings. Would that and Social Security be enough? Probably not. Admittedly, this is better than nothing. Moreover, her retirement account(s) might average better than a 6% return across 20 years.1

The math doesn’t lie, and the message is clear: Marisa needs to save more than $6,000 a year for retirement. Practically speaking, that means she should also exploit vehicles which allow her to do that. In 2014, you can put up to $5,500 in an IRA, $6,500 if you are 50 or older – but you can sock away up to $17,500 next year in a 401(k), 403(b), Thrift Savings Plan and most 457 plans, which all have a maximum contribution limit of $23,000 for those 50 and older.2

If Marisa is self-employed (and a sole proprietor), she can establish a solo 401(k) or a SEP-IRA. The yearly contribution limits are much higher for these plans. If Marisa’s 2013 net earnings from self-employment (after earnings are reduced by one-half of self-employment tax) work out to $50,000, she can put an employer contribution of up to $10,000 in a SEP-IRA. (She must also make similar percentage contributions for all “covered” employees, excepting her spouse, under the SEP IRA plan.) As a sole proprietor, Marisa may also make a combined employer-employee contribution of up to $33,000 to a solo 401(k) this year, and if she combines a defined benefit plan with a solo 401(k), the limit rises to $47,400. If her 2013 net earnings from self-employment come out to $150,000, she can make an employer contribution of as much as $30,000 to a SEP-IRA, a combined employee salary deferral contribution and employer profit sharing contribution of up to $53,000 to a solo 401(k), and contribute up to $96,300 toward her retirement through via the combination of the solo 401(k) and defined benefit plan.3

How do you save more? As you are likely nearing your peak earnings years, it may be easier than you initially assume. One helpful step is to reduce some of the lifestyle costs you incur: cable TV, lease payments, and so forth. Reducing debt helps: every reduced credit card balance or paid-off loan frees up more cash. Selling things helps – a car, a boat, a house, collectibles. Whatever money they generate for you can be assigned to your retirement savings effort.

Consistency is more important than yield. When you get a late start on retirement saving, you naturally want solid returns on your investments every year – yet you shouldn’t become fixated on the return alone. A dogged pursuit of double-digit returns may expose you to considerable market risk (and the potential for big losses in a downturn). Diversification is always important, increasingly so when you can’t afford to lose a big portion of what you have saved. So is tax efficiency. You will also want to watch account fees.

If you start saving for retirement at 50, your retirement savings will likely double (at least) by age 65 thanks to consistent inflows of new money, decent yields and compounding.4

What if you amass a big nest egg & still face a shortfall? Maybe you can reduce expenses in retirement by moving to another city or state (or even another country). Maybe you can broaden your skill set and make yourself employable in another way (which also might help you before you reach traditional retirement age if you find yourself in a declining industry).

If you haven’t begun to save for retirement by your mid-40s, you have probably heard a few warnings and wake-up calls. Unless you are independently wealthy or anticipate being so someday, the truth of the matter is…

If you haven’t started saving for retirement, you need to do something to save your retirement.

That may sound harsh or scary, but without a nest egg, your vision of a comfortable future is in jeopardy. You can’t retire on hope and you don’t want to rely on Social Security, relatives or social services agencies for your well-being when you are elderly.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – money.cnn.com/2012/08/15/pf/expert/late-start-retirement.moneymag/ [8/15/13]
2 – irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$17,500-to-their-401%28k%29-plans-in-2014 [11/4/13]
3 – forbes.com/sites/ashleaebeling/2013/11/01/retirement-savings-for-the-self-employed/ [11/1/13]
4 – forbes.com/sites/mitchelltuchman/2013/11/21/financial-planning-for-late-starters-in-five-steps/ [11/21/13]

Your Financial Co-Pilot

December 23rd, 2013 | No Comments | Posted in Financial News

If anything happens to you, your family has someone to consult.

shutterstock_130170590If you weren’t around, what would happen to your investments? In many families, one person handles investment decisions, and spouses or children have little comprehension of what happens each week, month or year with a portfolio.

In an emergency, this lack of knowledge can become financially paralyzing. Just as small business owners risk problems by “keeping it all in their heads,” families risk problems when only one person has an understanding of investments.

This is why a trusted relationship with a financial advisor can be so vital. If the primary individual handling investment and portfolio management responsibilities in a family passes away, the family has a professional to consult – not a stranger they have to explain their priorities to at length, but someone who has built a bond with mom or dad and perhaps their adult children.

You want an advisor who can play a fiduciary role. Look for a financial advisor who upholds a fiduciary standard. Advisors who build their businesses on a fiduciary standard tend to work on a fee basis, or entirely for fees. Other financial services industry professionals earn much of their compensation from commissions linked to trades or product sales.

Commission-based financial professionals don’t necessarily have to abide by a fiduciary standard. Sometimes, only a suitability standard must be met. The difference may seem minor, but it really isn’t. The suitability standard, which hails back to the days of cold-calling stock brokers, dictates that you should recommend investments that are “suitable” to a client. Think about the leeway that can potentially provide to a commission-based advisor. In contrast, a financial advisor working by a fiduciary standard has an ethical requirement to act in a client’s best interest at all times, and to recommend investments or products that clearly correspond to that best interest. The client comes first.

You want an advisor who looks out for you. The best financial advisors earn trust through their character, ability and candor. In handling portfolios for myriad clients, they have learned to watch for certain concerns, and to be aware of certain issues that may get in the way of wealth building or wealth retention.

Take account and fund fees, for example. These can subtly eat into retirement savings. According to Investment Company Institute research, annual expense ratios of stock funds averaged 0.77% in 2012. So why do many investors endure annual fund fees well above 1%? (The typical equity mutual fund charges an investor 1.3-1.5% a year.) An advisor acting in your best interest could alert you to egregious fees and work with you to find alternatives.1,2

Many investors have built impressive and varied portfolios but lack long-term wealth management strategies. Money has been made, but little attention has been given to tax efficiency or risk exposure.

As you near retirement age, playing defense becomes more and more important. A trusted financial advisor could help you determine a risk and tax management approach with the potential to preserve your portfolio assets and your estate.

Your family will want nothing less. With a skilled financial advisor around to act as a “co-pilot” for your portfolio, your loved ones have someone to contact should the unexpected happen. When you have an advisor who can step up and play a fiduciary role for you today and tomorrow, you have a professional whose service and guidance can potentially add value to your financial life.

If you’re the family member in charge of investments and crucial financial matters, don’t let that knowledge disappear at your passing. A will or a trust can transfer assets, but not the acumen by which they have been accumulated. A relationship with a trusted financial advisor may help to convey it to others.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – forbes.com/sites/johnwasik/2013/06/27/why-mutual-fund-fees-are-too-high/ [6/27/13]
2 – investopedia.com/university/mutualfunds/mutualfunds2.asp [12/5/13]

Monthly Economic Update – December 2013

December 23rd, 2013 | No Comments | Posted in Monthly Economic Update

Weekly Economic Update

The Truth About Food Expiration Dates

December 23rd, 2013 | No Comments | Posted in Lifestyle

470_2734592We’ve all been there-standing in front of our refrigerator tossing food because the expiration dates have passed. That, according to new research, may be a big mistake that is leading to a lot of wasted food.

According to a report from Natural Resources Defense Council and Harvard Law School’s Food Law and Policy Clinic, many Americans are prematurely throwing out food because they are confused by what expiration dates actually mean. And it is adding up to a lot of waste. More than 90 percent of Americans, according to this research, throw out food too early, and 40 percent of the U.S. food supply is thrown out unused in large part because of confusion regarding food dating.

There is no national regulation for food dating, and because of that tons of confusion exists as to what the dates on food mean. “Use by” and “Best by,” for instance, mean totally different things than “Sell by.” “Use by” and “Best by” are meant for consumers and are typically the date the manufacturer believes the product will be at its peak freshness. The date does not indicate spoilage, and so it is not a signal that the food is not safe to eat. “Sell by” is a label to help manufacturers and retailers, not consumers, to ensure proper turnover of products in stores. The short of it is that many consumers are using these labels to determine if food has spoiled, when in most cases it has nothing to do with that.

Interestingly, there seems to be a burgeoning movement trying to address this problem. Doug Rauch, the former president of Trader Joe’s, is launching a project called Daily Table. The project is repurposing edible produce slightly past its sell-by date with a new market opening early next year in Dorchester, Massachusetts. Food will be offered at deeply discounted prices. Meanwhile, auctions are popping up around the country for people to buy discounted expired food.

Here, some guidelines to keep in mind for specific foods:

Eggs: If you keep eggs refrigerated, they are still fresh three to five weeks after you buy them.

Canned Food: Canned food is still fresh for a year. That’s also what the expiration date will likely say. Some argue that canned food will be fine even after that date, and because canned food is vacuum-sealed, it doesn’t require food dating at all.

Apples: An apple will stay crisp and fresh for three weeks if refrigerated, and if they are cooked and then frozen, they will be good for eight months.

Cereal: Ready-to-eat breakfast cereal can last in your pantry without going stale for six to 12 months. Even if you eat cereal after that, it might be stale, but you certainly won’t get sick from it.

Meat: It’s recommended that you eat meat three to five days after you buy it. Freezing meat keeps it fresh and nutrient-filled for up to two months or more.

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Don’t Get Plucked By Snowbird Scams

December 23rd, 2013 | No Comments | Posted in Lifestyle

ScamsMigrating to warm-weather states like Florida and Arizona as the temperature drops “up north”? So are scammers on the lookout for pigeons to pluck during Snowbird Season, which runs from late November through April.

Some are part of organized crime ring—boiler-room telemarketers and so-called Gypsy Travelers who specifically target short-time vacationers and longer-staying, older seasonal residents. Others are local fraudsters taking advantage of the influx of visitors. Either way, here are the most common threats:

Identity theft. Crooked sales clerks and restaurant employees love free-spending tourists and snowbirds—especially when they pay by credit card. Vacationers are less likely to closely monitor their financial accounts away from home. “They know they have a better chance of using that card without getting caught,” said Joe Roubicek, who spent 20 years investigating scams as a Fort Lauderdale police detective and now counsels law enforcement across the U.S.

Although you’re liable for only $50 if your credit card is used fraudulently (and many plastic providers will waive that), an unscrupulous employee can copy your credit card information and glean other information online to open new accounts under your identity. Whenever possible, try to pay with cash, or use only one credit card and keep close tabs on its activity.

Pickpockets. Organized gangs travel south to work businesses and flea markets near retirement communities for a week or so, then move to the next community, warns Bob Arno, a former pickpocket-turned-comedic counselor on street crimes. Older snowbirds are prized targets because they tend to carry cash, wear looser-fitting clothing and may have delayed reactions (or are busy shopping).

When you see strangers approaching or are in a crowd, keep your hand on your wallet or handbag close—especially when approached by “lost” duos in need of directions. In a common ploy, one distracts—sometimes with map in hand—while the other dips. When possible, keep wallets in a safety pouch worn below clothing or in a buttoned pocket.

Telemarketing cons. Snowbirds can expect phony phone calls claiming they won a sweepstakes, have a grandchild in need, or other telephone trickery seeking money or personal information. Why? Scammers buy calling lists of snowbird-rich communities knowing some swell by the thousands of “in season” occupants. Or they simply increase random calls to those area codes. If you own a condo or second home, it’s even easier to get personal info such as your name and age through public records posted online.

Repair ripoffs. Back home, unannounced visits by self-described utility workers or contractors should sound alarms of a possible scam. But excuses to get inside a home have more credence, at least to unsuspecting snowbirds, when the front-door fraudster claims “the condo association sent me.” Once inside, phony exterminators may “accidentally” spill liquid or spray pesticide on occupants. (As you clean up, they might try to clean you out.) So-called contractors may feign work and when you’re not looking, do their own grab-and-go. Unless you initiate contact or the condo association gives prior notice, never let any stranger inside your dwelling.

In parking lots, scammers search for out-of-state license plates or rental cars. They pop the hood and pull wires to disable the vehicle, waiting for you to return. Then they offer to help get the car started for a price. A better option: If you’re not an AAA member, call the local police for assistance.

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At the Heart of Christmas

December 23rd, 2013 | No Comments | Posted in Videos

Holy moly, this is adorable. While belting out a Christmas song at a school concert, a KODA (kid of deaf adult) performed sign language so her mom could understand the lyrics.

The video, which captures a group of kindergartners singing a Christmas song to the tune of “Bingo was his name-o,” was recorded by proud mother Lori Koch. Her daughter, 5-year-old Claire, is the blonde in the middle, the one giving a performance worthy of tossed roses and a standing ovation.

Koch told Yahoo News in an email that she wasn’t expecting her daughter to sign during the performance. “The regular kids used generic hand motions while my daughter chose to use sign language, to our surprise,” she said.

Koch told Yahoo News that she can read lips, speak and sign, while her husband, who is also deaf, uses only sign language. “ASL is the first language in our home, so our daughter has been exposed to it since birth,” she said.

Koch complimented her daughter’s signing abilities, joking that she “is a much better interpreter than Nelson’s fake one.”

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