Sunday, June 22, 2008
What are we ought to do?
We cannot foresee the future but we know we have to deal with the problem sooner than later. The problem being: what are our options? We have many, but our government has limited the amount by establishing timing bombs with our 401ks, IRA’s and Roth’s. These vehicles help in the long run but will not be enough. They complement retirement portfolios but will not be enough. Boomers will enjoy their defined benefit pensions, 401ks, Roths, Real Estate holdings, Stocks,bonds, and of course social security pensions; to include Medicare and Medicaid. If, you are thirty, forty and fifty-something, you will lack some of these benefits. So, what are you ought to do?
Planning, Planning, Planning and more planning
We have the solutions and strategies that will address these concerns. The only main problem is that we love to procrastinate and leave planning for much later. Stay tuned for more to come.
Wednesday, June 11, 2008
if you have:
- Recently changed jobs,
- Left qualified plan assets with a former employer after a job change, or
- Obtained a divorce settlement in which retirement plan assets are involved. (QDRO's)
The decision you make now about your retirement plan assets could have a major impact on your financial future. It's a decision you make carefully, after thoroughly understanding the choices available to you. For this very reason I recommend a sound financial plan which encompasses your goals, needs and retirement goals. Financially preparing for those changes is no simple matter. Here's why:
Retirement could last for a long time. Increasing life expectancies mean people are spending as much as 20 to 30 years in retirement on average. It takes a real financial balancing act to make sure you do not run out of money, maintain purchasing power and build in enough flexibility to address changing needs.
The number of traditional employers offering traditional pension plans known as defined benefit are shrinking, they are expensive and are being phased out with 401Ks and qualified plans. Qualified plans means that your contribute to a plan which does not incurred taxation during the accumulation period, you will be taxed during your retirement years. defined benefit pensions are a form of annuities paid up by employers and you receive a predetermined amount for the rest of your life. Now you can see that the main source becomes your 401K and what you have accumulated during your working years. Early Baby boomers are enjoying these type of plans, latter boomer have succumb to the new qualified plans and are ill prepared for their retirement years.
The three legs of retirement are being phased out and the trouble social security benefits will be shrinking, these legs included the defined company benefit pensions, social security pension, your own savings. As you can see these legs are changing and it is left to you to make adjustments to a successful plan and enjoyable retirement years. With the help of a planner you can meet your goals in a timely matter. Although we must fight complacency's and procrastinations, we always leave important decisions until the last minute.
Traditionally we spend more time planning for trivial and unnecessary expenses, for example a yearly vacation or a major purchase, a house remodeling project, etc. I found that people leave planning for last and until it is a must; this leaves the planner with a few years to work with and limited resources. We do not plan to fail but we fail to plan most of the time.
You will need to replace 70 to 80% or your retirement income, here is a sample:
A couple earning $100,000 annually combined will likely need to replace $40,000 to $50,000 in annual income after retirement. Using a "safe" annual withdrawal rate of 4%, and planning for a retirement of 25 to 30 years or more they will need to accumulate at least $1 million in assets to achieve their goal. This sounds troublesome but the numbers do not lie. In addition to this finite number we have to deal with inflation costs, economic issues, rates of return, market volatility. Most people who are not in the know have a disadvantage to deal with these facts. It is paramount to seek advice and prepare in a timely manner to continue or upgrade one's lifestyle. Two outcomes are certain, depending on how you prepare; one is that one's lifestyle will change and the other is a lifestyle which includes desires and goals attainment. Either one outcome is up to you. We are here to help you cope and prepare for proven strategies to make it happen. I will be having workshops to prepare my clients to a better understanding and how their own planning is developing. One thing we know for certain, plans change due to unforeseeable facts, but proven strategies and trigger prepares to deal with them accordingly. Please visit our website for upcoming workshops and allow time to attend to learn and be prepared.
Barca Financial Group
Goals without a plan are just dreams and wishes.
Make it happen