Sunday, June 22, 2008

The New Millennium Retirement Part 1

We are all aware of the Baby Boomer's coming into retirement which started when Kathleen Casey-Kirchling born in January 1946 started her social security benefits and leading the way to 80 million citizens who will be retiring in the next decade. We will be witness of their culture, success and failures relating to their retirements; what to do or not to do. As planners we learn strategies and methods to facilitate our client’s retirement goals and ambitions. One area we neglect to address is that times are different now and they will be a very hostile environment to our pocket books, existing retirement ideologies. The old adage don't try to fix it if it isn't broken. I want to say it is broken and it will give many unprepared citizens a false sense of security. Boomers will enjoy a different variety of benefits that we will not enjoy. One fact is that their portfolios include a defined benefit plan. These plans are a way of the past, when big companies allocated funds for their retirees who the only factor was to stay employed for a period of time, usually over twenty years or more. We know our labor force of today change jobs as frequently as three years or less. Employers cannot fund defined benefit plans any more to stay competitive against globalization and keep their doors open. Just remember GM woes with their retirees and how they could not cut costs with these plans in force. We have witnessed the biggest real estate shift and crash in U.S history, next is the Credit market and retailing industry as we fight our way through Stagflation; Boomers enjoyed the bull market of the 80’s, although they suffer some hiccups in the stock market's history during the well publicized Black Monday on October 19, 1987 and September’s 11 attack to our World Center buildings. Our portfolios and planning will endure the lack/troubles of social security funds as they may run out by 2040 if our elected officials don't do anything about it; there will be fewer workers per retiree ratios. Our boomer enjoys 10:1; we will have a 2:1 ratio.

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


Important financial decisions shouldn't be made on the spur of the moment, particularly when they affect something as important as your retirement years.
if you have:
  • Retired
  • 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.


Hannibal Chinchilla


Barca Financial Group

Goals without a plan are just dreams and wishes.

Make it happen

Sunday, June 1, 2008

My first blog

Hello everyone, I hope the break during the Memorial Day weekend was happy and rewarding, we celebrated one year of Bitsy's (pet Chihuahua) ordeal. She got lost for four days and three nights in the desert on the east side of town, frequent by coyotes and birds of pray. She is a miracle since she only suffered dehydration and a few cuts and bruises, she is a trooper and we are so glad to have her back. We never gave up, but it was stressful watching the coyotes roam the area we were searching. It is amazing how the neighborhood reacted and providedhelp, support and search parties. We posted a reward sign on almosts every posible spot, on Monday Memorial Day 07 we got a call from a lady who was given our number by a wonderful person who has become my client, his name is Gary and we always remember the event as he definitely Bitsy's savior, we also thank our pet communicater (Mary) who participated in the search and continue to gives us strength and hope during the ordeal. She pointed the direction and the whereabout we needed to look for Bitsy. We enjoy our pets as members of the family. This weekend Sassy our Persian Cat got her summer lion's cut.