The Barron’s Top Advisors Summit is an invitation-only gathering of elite-tier advisors to share best practices and elevate standards of service. Barron’s hosts a series of invitation-only events to provide an opportunity for top advisors from across the industry to meet and discuss the latest innovations in the wealth services field, developments in the global economy and strategies for financial planning and investment management.
Barron’s is America’s premier financial magazine. It provides in-depth analysis and commentary on the markets, updated every business day online.
On February 7th, 2018, Steve held an impromptu conference call for all clients in light of market volatility during the previous week. We wanted to post it online in case you missed it.
Always remember any questions about your accounts or finances, please reach out the the office and our staff will be happy to help.
As you are reaching the age when retirement is not far away, you may begin to feel a little stressed worrying if you have enough of a nest egg to retire without many issues. If up until now you have been diligent in putting money aside for retirement, you probably feel as if you are in good shape. However, if retirement saving has not been a priority, now that you are in your 50s there is no time to waste. In order to help you become more prepared for your retirement, check out the following steps you should begin taking right now.
1. Play Catch-up
If you are in the age bracket of 50 or older, you actually receive a bonus when it comes to saving for retirement. If you have reached the maximum annual contribution level on your IRA or 401(k), catch-up contributions will assist you in saving even more on an annual basis. Although the rules of catch-up contributions are subject to change, as of 2015, you are allowed to save an additional $6,000 in your employer’s plan and another $1,000 in your IRA. Therefore, taking advantage of catch-up contribution allowances while you are in your 50s, will allow you to save approximately $30,500 towards your future retirement.
This is a hypothetical example and is not representative of any specific situation. Your results will vary.
2. Rethink Your Portfolio
Although it is often advisable to invest some of your money in riskier investments, once you near retirement age, it might be a good idea to rethink your portfolio and also rebalance your investments. This is especially true if you have not saved much for retirement thus far. In order to begin expanding your retirement funds, it is advisable to shuffle your investments around and consider assets (such as bonds) which provide a little more security for your money.
3. Crunch the Numbers on Social Security
Social Security is often used as a supplement to a person’s savings. However, in order to have an idea of how Social Security will play into your financial wellbeing, it is important to calculate numbers in order to fully know how much you will actually receive. For example, if it is part of your plan to start drawing on Social Security at the age 62, the youngest age at which you can draw, it is important to know that the benefits you receive will be comparatively smaller. However, if you decide to wait until full retirement age before you begin withdrawing, you will receive 100% of your benefits. Additionally, if you are able to wait until sometime between the full retirement age and 70, you will also receive a bonus. Due to the differences in payouts depending on your age, it is important to carefully check the numbers before deciding a time at which to starting drawing Social Security.
4. Knock Out the Rest of Your Debt:
If you are still carrying around debts such as student loans or credit card debt, it might be a good idea to go ahead and eliminate those before you begin retirement. Getting rid of your debt will help you save additional money when you retire and eliminate many of the expenses you have been working into your budget for so many years. However, it is important to note that although getting rid of such debt is important, it should never hinder you from putting money aside for your retirement. While paying your debt off is good, your retirement fund is just as equally important.
5. Consider Long-Term Care Insurance
Long-term care is specifically designed to pay for some or all of your medical expenses should you need care such as nursing home care or home health aid. Medicaid can also help to pay for these expenses should they arise; however, you may end up spending most of your assets in order to qualify. If you have built up a solid retirement fund, then a long-term care policy will help you to get the most out of your money and ensure all the hard work you put into building a nest egg doesn’t go to waste. A good thing to keep in mind when considering long-term care is that the younger you are when you apply, the lower your payments will be.
6. Practice Living on a Post-Retirement Budget
A huge mistake people in their 50s often make concerning their retirement is not setting realistic goals for what they will need. After all, it can be quite a shock once you move away from a steady salary and start relying fully on your savings and Social Security benefits.
In order to assure this difference in income does not cause great difficulty, it is advisable to take specific steps before entering retirement. First, it is important to calculate your intended retirement expenses then plan a budget which helps you to pay your monthly expenses. Second, it is a good idea to take your budget through a trial run. Getting an idea of how your budget will actually work when you retire is a good way to catch issues before it is too late. If you see the monthly budget you have allotted will not be sufficient, you may need to look at places where expenses can be cut down or even consider ways to expand your income-earning years such as through worktirement.
Although you may be several years away from retiring, it is never too early to begin making preparations. Early planning and research will help to make the transition into retirement a little smoother. Additionally, in the realm of finances, having a specific plan for your money will help you to avoid many of the pitfalls which occur with who neglect to take the necessary precautions to assure their retirement goes as smoothly as possible.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. You should discuss your specific situation with the appropriate professional.
Hiring a financial advisor might be a good idea if you need help managing your portfolio, planning your estate or working toward your long-term goals. Knowing that you can trust your advisor to make sound decisions is the key to a good professional relationship. If you’re worried about falling victim to a Bernie Madoff-style scam, here are some ways to tell that you’re being ripped off.
1. They Promise Too-Good-to-Be-True Returns
As the expert, your financial advisor should display a certain amount of confidence in the investments they’re steering you towards. Overconfidence, on the other hand, can be a sign that your advisor has something to hide. If they’re guaranteeing a specific return on investment or showing you balance sheets with above-average yields from year to year, it’s a good idea to question whether those investments are legit.
The same goes for if they’re promising high returns on low-risk investments. There are vehicles that generate consistent returns without the same degree of volatility as the stock market. But it’s best to be skeptical if your advisor seems overly enthusiastic about selling you a particular product.
2. They’re Cagey About Communication
In addition to trust, transparency is another important component when you’re paying a professional to manage your finances (particularly if they have a fiduciary duty to you). Good communication shows that your advisor is committed to laying all their cards on the table.
While that doesn’t mean they’re required to be on-call 24/7, they should be able to respond within a reasonable time frame if you have a question or concern that needs to be addressed. If you have a hard time pinning your advisor down or they’re less than forthcoming when you request specific information, such as a log of real-time trades, that should indicate that something’s not right.
3. They Convince You to Trade More Often
One of the ways financial advisors make money is by earning a commission every time you make a trade. If you notice that your account is experiencing an unusually high trading volume, you may be a victim of what’s known as churning. Simply put, this happens when an advisor encourages you to buy and sell purely for the purpose of racking up extra commission fees.
So how do you tell whether your account has been churned? You can look at the gains in your portfolio that follow your trades. If your advisor is telling you that you need to swap out a particular stock or portfolio to increase your wealth but the gains are falling short, that could be a sign that your advisor is churning.
4. The Investments They’re Choosing Aren’t Your Style
Financial advisors are supposed to guide you toward investments that align with your overall investing strategy. If you’re being pressured to move too far outside your desired asset allocation, that may signal that your advisor’s motives are more about preserving their bottom line than yours.
For example, if you’re being pushed toward investments that carry high upfront sales charges, your advisor may just be out to line their own pockets with the commission. Another tactic advisors may use is convincing you that you need to invest in a wrap account. While wrap accounts can streamline your investment management, they might come with hidden fees, and are not suitable for all investors.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Article provided by smartasset.com. Original article may be located here.
Need help managing your financial life? An investment professional is a tremendous resource to tap for financial planning information throughout your lifetime. For instance, your financial advisor can help you with:
Short-term savings: Avoid piling up debt when unexpected expenses come your way by having at least three months of living expenses available at all times. If you don’t have an “emergency” fund, your financial advisor can help you figure out how to build one.
Investing for long-term goals: Your investment professional can help you determine how much you will need to retire and then work with you to build a portfolio to pursue the kind of retirement you have in mind. He or she can also help you come up with creative funding solutions for your children’s education.
Estate planning: Contrary to popular thinking, estate planning is not just for the wealthy. Creating a will and naming a health care proxy (someone who makes medical decisions for you if you are incapacitated) and durable power of attorney (someone designated to decide financial matters if you are unable to do so) can make sure your wishes are honored. Consider using a qualified professional to develop an appropriate plan.
Three Tips for a Smooth Financial Meeting
Prepare for an appointment with a financial advisor by keeping this pre-meeting checklist in mind.
- Organize your thoughts and set priorities. Think about your financial goals and time frames. Your advisor will be able to help you review these issues and match them to your tolerance for investment risk. Also discuss your top areas of financial concerns, such as reducing debt.
- Gather the appropriate paperwork. You’ll likely need to bring financial documents, such as investment account statements and tax returns, to your first meeting. Call in advance and ask what documents would be helpful.
- Prepare questions for your advisor. It’s important that you feel comfortable with your advisor and the services provided. Ask about the type and level of advice you should expect. Talk about how often you should meet for a “checkup” or to rebalance your portfolio.1
1Rebalancing strategies may involve tax consequences, especially for non-tax-deferred accounts.
Investing involves risk including loss of principal. No strategy assures success or protects against loss. Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2015 Wealth Management Systems Inc. All rights reserved.
As a single parent, you need to understand the financial strategies that can stretch your income and help you lay the groundwork for a secure future. Consider the following lessons to help improve your family’s bottom line:
Identify Your Goals
You can’t have a financial plan without first defining your financial goals. Start by recording all of your short-, medium-, and long-term financial goals.
For example, a child’s education could be one of the biggest expenses in your future. Setting aside money for emergencies and planning for retirement are other important goals you’ll need to keep in mind while raising a family. Don’t let day-to-day concerns distract you from such important goals. Plan for today and tomorrow.
Be a Better Budgeter
To pursue your family’s goals, it’s necessary to manage your household’s cash flow. That involves tracking income and spending, eliminating unnecessary costs, and living within the confines of a realistic budget.
For example, if you spend $2 each work day on a take-out coffee, that amounts to about $40 each month. By eliminating that minor expense from your budget, you could easily save almost $500 per year.
Say No to Debt
High-interest credit card debt can make it extremely difficult to get your budget in order. If you have an outstanding balance, consider paying it off as aggressively as possible. The savings in interest alone could allow you to address other important financial goals.
It’s also a good idea to review your credit history, commonly referred to as your credit report, to make sure that the information it contains about your past use of credit is accurate.
Capitalize on Tax-Advantaged Accounts
Once you free up some cash, apply it toward your goals. But first, learn about the savings and investment opportunities available to you. Keep in mind that tax-deferred investment accounts may enable you to grow the value of your assets more significantly than taxable accounts. Examples of such accounts include 401(k) plans and IRAs for retirement planning.
For college goals, Section 529 college savings plans. These plans are state-sponsored investment programs that allow tax-free withdrawals for college expenses. College savers who contribute to their home state’s 529 plan may be eligible for state tax breaks.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2015 Wealth Management Systems Inc. All rights reserved.