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Sunday, June 19, 2011
Saturday, June 18, 2011
Tuesday, April 5, 2011
Consider Your Retirement Needs, but Don’t Forget Your Retirement Wants
You might have read or heard that you need to replace about 80% of your pre-retirement income to maintain your standard of living in retirement. Although some research validates this guideline, consider that half of today’s retirees say their spending is higher or about the same as it was when they were working.1–2
The idea that you may need less income in retirement considers that your income tax burden may be lower when you quit working and that you probably are not contributing a large chunk of your salary to retirement plans. Variables that can influence the replacement ratio — positively or negatively — include your living expenses, overall debt level, health-care costs, and whether you will receive an employer-provided pension.
Rather than focusing on how much money you’ll need to get by in retirement, take some time to envision a retirement lifestyle that you can really get excited about. Unless you plan to spend retirement being frugal, there’s a good chance that you could need more than 80% of your pre-retirement income to fund the lifestyle you seek.
More Time, More Money?
Retirement may be the first time in your life when you are free to travel, play golf, go back to school, focus on hobbies, and pursue other interests that you simply didn’t have time for during your working years.
What a disappointment it would be to retire and finally have the time, but not the money, to do as you please. If you would find it difficult to afford your ideal retirement lifestyle on your current income, it could be an indication that you are underestimating how much income you’ll need in retirement.
Changing Needs
As we grow older, what once may have been considered a luxury can become a necessity. In their list of “basic needs,” more than half of baby boomers include an Internet connection, special occasion gifts, and pet care. Many baby boomers would add family vacations, dining out, professional haircuts/coloring, movies, and their children’s or grandchildren’s education to the list of basic needs.3 And for 98% of baby boomers, health-care coverage is not a luxury but a basic need, one that they are extremely concerned about being able to afford.4
Underestimating Costs and Spending
The danger of underestimating how much you expect to spend in retirement is that it could lead you to save too little or invest too conservatively during your working years. Among the 46% of workers who have attempted to calculate how much money they will need for retirement, 44% made changes to their retirement savings strategies as a result, with the majority of changes involving saving or investing more.5
To prepare for a retirement that you can truly look forward to, consider the luxuries that your retirement-needs calculation may not account for. It could mean the difference between living well and just getting by.
1) CNNMoney, October 8, 2009
2, 5) Employee Benefit Research Institute, 2010
3) MarketWatch, August 6, 2010
4) Society for Human Resource Management, 2010
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
For more articles like this visit our website: http://www.barcafinancial.com/
The idea that you may need less income in retirement considers that your income tax burden may be lower when you quit working and that you probably are not contributing a large chunk of your salary to retirement plans. Variables that can influence the replacement ratio — positively or negatively — include your living expenses, overall debt level, health-care costs, and whether you will receive an employer-provided pension.
Rather than focusing on how much money you’ll need to get by in retirement, take some time to envision a retirement lifestyle that you can really get excited about. Unless you plan to spend retirement being frugal, there’s a good chance that you could need more than 80% of your pre-retirement income to fund the lifestyle you seek.
More Time, More Money?
Retirement may be the first time in your life when you are free to travel, play golf, go back to school, focus on hobbies, and pursue other interests that you simply didn’t have time for during your working years.
What a disappointment it would be to retire and finally have the time, but not the money, to do as you please. If you would find it difficult to afford your ideal retirement lifestyle on your current income, it could be an indication that you are underestimating how much income you’ll need in retirement.
Changing Needs
As we grow older, what once may have been considered a luxury can become a necessity. In their list of “basic needs,” more than half of baby boomers include an Internet connection, special occasion gifts, and pet care. Many baby boomers would add family vacations, dining out, professional haircuts/coloring, movies, and their children’s or grandchildren’s education to the list of basic needs.3 And for 98% of baby boomers, health-care coverage is not a luxury but a basic need, one that they are extremely concerned about being able to afford.4
Underestimating Costs and Spending
The danger of underestimating how much you expect to spend in retirement is that it could lead you to save too little or invest too conservatively during your working years. Among the 46% of workers who have attempted to calculate how much money they will need for retirement, 44% made changes to their retirement savings strategies as a result, with the majority of changes involving saving or investing more.5
To prepare for a retirement that you can truly look forward to, consider the luxuries that your retirement-needs calculation may not account for. It could mean the difference between living well and just getting by.
1) CNNMoney, October 8, 2009
2, 5) Employee Benefit Research Institute, 2010
3) MarketWatch, August 6, 2010
4) Society for Human Resource Management, 2010
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
For more articles like this visit our website: http://www.barcafinancial.com/
Friday, February 4, 2011
Why You Want to Know How Much
Business Valuation Can Be Valuable Even When No Sale Is Planned
If you have no plans to sell your business, an up-to-date valuation may seem like an unnecessary expense. But you might be surprised at how important the current value of your business can be to achieving your long-term goals. The current value of your business can affect how you approach everything from retirement to estate conservation and your succession strategy.
Your Retirement Lifestyle
The typical business owner has 50% to 70% of his or her net worth in the business.1 If you expect your business to help fund your retirement, a significant change in value might mean you need to adjust the amount of income you are investing for retirement. A shift in value might also affect the date at which you expect to retire, which could influence the timing of your decisions about the kinds of preparations you expect to make to get the business ready to sell or pass on.
Estate Conservation and Succession
It’s understandable if you would rather not spend too much time thinking about whether your business has lost value, but there could be an upside to knowing. If you are expecting to transfer ownership to the next generation, lower asset values may help you transfer a larger share of the business without tax consequences.
If your business has a buy-sell agreement that values the business too highly, a more reasonable valuation may help the survivors or successors take over without paying more than the business is actually worth.
If you discover that your business is responsible for more of your net worth than you realized, it could indicate that it’s time to diversify away from the business. It’s rarely a wise move to let your financial future hinge on the fate of a single asset — even if it is your own business.
Given the events of the past few years, you may be more inclined to focus on today’s problems than on what could happen years from now. But a precise valuation may provide you with valuable information that you didn’t realize you needed.
1) Financial Advisor, August 27, 2010
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
For more information:
http://www.barcafinancial.com/
If you have no plans to sell your business, an up-to-date valuation may seem like an unnecessary expense. But you might be surprised at how important the current value of your business can be to achieving your long-term goals. The current value of your business can affect how you approach everything from retirement to estate conservation and your succession strategy.
Your Retirement Lifestyle
The typical business owner has 50% to 70% of his or her net worth in the business.1 If you expect your business to help fund your retirement, a significant change in value might mean you need to adjust the amount of income you are investing for retirement. A shift in value might also affect the date at which you expect to retire, which could influence the timing of your decisions about the kinds of preparations you expect to make to get the business ready to sell or pass on.
Estate Conservation and Succession
It’s understandable if you would rather not spend too much time thinking about whether your business has lost value, but there could be an upside to knowing. If you are expecting to transfer ownership to the next generation, lower asset values may help you transfer a larger share of the business without tax consequences.
If your business has a buy-sell agreement that values the business too highly, a more reasonable valuation may help the survivors or successors take over without paying more than the business is actually worth.
If you discover that your business is responsible for more of your net worth than you realized, it could indicate that it’s time to diversify away from the business. It’s rarely a wise move to let your financial future hinge on the fate of a single asset — even if it is your own business.
Given the events of the past few years, you may be more inclined to focus on today’s problems than on what could happen years from now. But a precise valuation may provide you with valuable information that you didn’t realize you needed.
1) Financial Advisor, August 27, 2010
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
For more information:
http://www.barcafinancial.com/
Sunday, January 16, 2011
Thursday, December 16, 2010
Lesson Learned, or Not
In the global Economics arena, we have seen how in 2001 the country of Argentina defaulted on a $95 Billion debt, as it remains one of the biggest sovereign defaults in history. We have seen how Ireland and Greece, Portugal and Spain struggle to restructure their debts and perhaps leave the euro. Things to account for are inflation, devaluation of a currency, budget deficit and loosing trading partners. Sounds familiar? A break up of the Euro will have ripple effects if it is allowed. Stronger economies are paying for the weaker ones and infuriate its citizens. In order, to maintain social, economic and even political ties, Europe seems to head this way. In the US, this is not good news for our outlook to recovery. Many steps ought to happen. I venture to say the EU, IMF, the US and China will do what it takes to avoid a default and breakup of the euro.
Keep your savings and prepare for turbulence.
http://www.barcafinancial.com/
Keep your savings and prepare for turbulence.
http://www.barcafinancial.com/
Sunday, December 12, 2010
ASSUMPTIONS VERSUS FACTS
Sunday, December 12, 2010
Assumptions vs. Facts
By Hannibal Chinchilla
Financial plans are mostly based on assumptions. These assumptions can be about taxation, health, income streams, inflation, buying power of the dollar, what the stock market will do in the near future, when you are thinking to retire, how much you will need to retire, etc. One thing is for certain, the plan will change as the assumptions will also change, so why do we spend time planning on assumptions?
We need to start somewhere, to have a road map or a course of action; otherwise it will be like driving a car just to drive it and no destination in sight. Airplane pilots often have a flight plan, but often this plan changes; there are too many variables to consider, too many unforeseen events. But with a basic flight plan the pilot can make minor and consistent changes to make it to the destination. The financial plan works the same. Make minor and consistent corrections to ultimately get what you envisioned.
Nowadays there are too many variables to considered, economic, political, unthinkable variables, like losing existing benefits that were thought to be there for life; but with a steady oversight and consistency and discipline one can make it there. Unfortunately, many people spend more time planning on other things, like a yearly vacation or watching TV, statistically the average American on average watches approximately 30 days of television if you put all the hours’ non-stop. Additionally we tend to take action when it’s too late to take action, procrastination is a common fact.
Once you have a general idea of your desired destination, write it down on paper, and make small corrections over the short term to get there, stage it for a year, two year, five year and 10 year horizons. Make a list of items and things you always wanted to get accomplished; but never made past the first few months of the year. This year take a moment to think what you would like to attain. Make an action list. Make it short, with what I call the “SMART” concept; S for Specific, M for measurable, A for attainable, R for Realistic and the most important T for Time. If you are tired of broken New Year Resolutions and are stuck on that vicious cycle year after year, the only way to break the cycle is to change your mindset of how you view things, make a paradigm adjustment; and stay away from negative people.
If we accept the fact that even the best plan will be wrong, we can shift our energies on the “process” of getting there; the small things that can make an assumption become a fact.
Happy Holidays
From Hannibal Chinchilla
Barca Financial Group,
For similar topics visit our blog and website: http://www.barcafinancial.com/
Assumptions vs. Facts
By Hannibal Chinchilla
Financial plans are mostly based on assumptions. These assumptions can be about taxation, health, income streams, inflation, buying power of the dollar, what the stock market will do in the near future, when you are thinking to retire, how much you will need to retire, etc. One thing is for certain, the plan will change as the assumptions will also change, so why do we spend time planning on assumptions?
We need to start somewhere, to have a road map or a course of action; otherwise it will be like driving a car just to drive it and no destination in sight. Airplane pilots often have a flight plan, but often this plan changes; there are too many variables to consider, too many unforeseen events. But with a basic flight plan the pilot can make minor and consistent changes to make it to the destination. The financial plan works the same. Make minor and consistent corrections to ultimately get what you envisioned.
Nowadays there are too many variables to considered, economic, political, unthinkable variables, like losing existing benefits that were thought to be there for life; but with a steady oversight and consistency and discipline one can make it there. Unfortunately, many people spend more time planning on other things, like a yearly vacation or watching TV, statistically the average American on average watches approximately 30 days of television if you put all the hours’ non-stop. Additionally we tend to take action when it’s too late to take action, procrastination is a common fact.
Once you have a general idea of your desired destination, write it down on paper, and make small corrections over the short term to get there, stage it for a year, two year, five year and 10 year horizons. Make a list of items and things you always wanted to get accomplished; but never made past the first few months of the year. This year take a moment to think what you would like to attain. Make an action list. Make it short, with what I call the “SMART” concept; S for Specific, M for measurable, A for attainable, R for Realistic and the most important T for Time. If you are tired of broken New Year Resolutions and are stuck on that vicious cycle year after year, the only way to break the cycle is to change your mindset of how you view things, make a paradigm adjustment; and stay away from negative people.
If we accept the fact that even the best plan will be wrong, we can shift our energies on the “process” of getting there; the small things that can make an assumption become a fact.
Happy Holidays
From Hannibal Chinchilla
Barca Financial Group,
For similar topics visit our blog and website: http://www.barcafinancial.com/
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