Protecting Your Nest Egg Posted on July 6, 2020 by ladams Protecting principal while investing for growth With the inevitability of stock market fluctuation, many retirement investors look for an investment strategy that provides protection of their nest egg while still affording the potential for additional growth. By strategically combining a guaranteed fixed-rate investment* such as a fixed annuity with a diversified PlanMember growth portfolio, you can pursue just such a strategy. This principal protection strategy is designed help ensure that at least your initial investment will be available at retirement regardless of how the stock market performs. In the event that the stock market provides historically average or superior returns, this strategy positions you to potentially achieve higher long-term growth than a fixed-rate investment. How it works As a general rule, begin by subtracting your current age from the age that you will begin making withdrawals from the investment. The difference is your investment time horizon. Next, use your investment time horizon and the average annual interest crediting rate of the fixed-rate investment. These factors will determine the allocation of your savings to invest between the fixed-rate investment and the growth component of your portfolio. The idea is to find the percentage of the fixed-rate component of your portfolio that will restore your principal investment amount regardless of the performance of your growth investments. Is a principal protection strategy right for you? It is very important to note that a principal protection strategy is not for everyone. If you have a longer investment horizon, you should be aware that by investing a large percentage of your nest egg in fixed rate investments, you are sacrificing the potential to benefit from the historically higher long-term returns of the stock market. This could result in a significantly smaller nest egg in retirement. Before undertaking a principal protection strategy, you should enlist the help of your PlanMember Financial Professional. To determine an average annual interest crediting rate, you’ll need to consider factors such as first-year bonus crediting, extra surrender period crediting, old money/new money crediting and the historic or guaranteed post surrender period crediting. Because these calculations can be a little tricky, your PlanMember Financial Professional will be happy to assist you, as well as help you select an appropriate fixed-rate investment and prudently allocate the growth portion of your portfolio. * Guarantees and benefits are subject to the claims paying ability of the issuing insurance company. Withdrawals of taxable amounts prior to age 59½ are subject to ordinary income tax and a 10% IRS tax penalty may apply. This is not a solicitation or offer to purchase or sell any security. This information is not intended to be used as the primary basis for investment decisions and should not be construed as investment advice.
How Much Should I Save? Posted on July 6, 2020July 6, 2020 by ladams Living a comfortable retirement requires a savings plan For most of us, achieving a financially secure retirement takes careful planning. The first step in this planning process is to estimate your retirement income needs and then calculate how much you will need to save to meet your goals. Determine your retirement income needs Most experts say that you will need approximately 60% to 80% of your pre-retirement income in retirement. For a more thorough analysis of your retirement income needs, start by making a list of your current expenses. You may notice that some of these expenses, such as a mortgage or children’s educational expenses, may decrease or even disappear by the time you retire, while other expenses, such as travel or insurance expenses, may stay the same or perhaps increase in retirement. Next, consider additional anticipated expenses that you might incur during your retirement. Often, these are the expenses that will fund your retirement dreams. Examples include the payments on the boat or motor home you’ve always wanted, or the cost of a long-anticipated trip around the world. Identify sources of income After you have estimated your overall retirement income needs, deduct any retirement income you will receive from such things as Social Security, state retirement systems, pension plans, annuities or other sources. You can receive an estimate of your Social Security benefits by contacting the Social Security Administration at www.ssa.gov. By deducting these sources of income from your overall retirement income needs you can determine the amount of retirement income that must come from your personal savings. Calculate what you need to save Once you have determined the amount of your retirement income that must come from your personal savings, you can calculate how much total savings you will need to meet your income goal. Consider the age at which you will retire, when you will begin withdrawals and your overall life expectancy. Keep in mind that most of us will need a nest egg that will last for 15 to 20 years or more in retirement. The earlier you retire, the larger nest egg you will need. Monthly or weekly savings plan After you have calculated your total savings goal, estimate how much you will need to save on a regular basis. Factors include your current age, expected age at retirement, withdrawal age and any retirement savings amounts that you currently have. You will need to make certain assumptions about the growth of your investments and how inflation will affect this growth. It’s a good idea to keep your growth assumptions conservative. Overestimating the growth of your investments can lead to a savings shortfall when you reach retirement. PlanMember can provide a quick and simple Personal Plan & Savings Analysis to help you get started on the road to retirement. Contact us now, and start planning your future today.
5 Reasons to Hire an Experienced Financial Advisor to Help You Plan for Retirement Posted on June 25, 2020June 25, 2020 by ladams Planning for your retirement can be challenging. How can compound interest work in your favor? What role do time and principal play in your savings? What investment vehicle and strategy is right for you? You’d advise any student struggling with a complex subject to engage a tutor, so why not take your OWN advice?! Getting the help of an experienced financial advisor can be vital to reaching your retirement goals. The following are just a few of the ways an experienced professional can help. 1. Guidance on how to begin It can be confusing to know how to take the first step when it comes to retirement planning. Do you know what types of programs, investments, and strategies might help you reach your goals? If not, don’t worry, an advisor can get you started with the basics and guide you through the process. 2. Constructing a plan that’s right for you Just as every student you teach is unique, your needs for retirement planning are as well. Preparing for retirement is best approached by articulating your specific goals and a plan to achieve them with the help of a knowledgeable advisor. They can help you choose the right investments to meet your objectives. The investment programs available to teachers are unique and differ from most other employees, so guidance from a financial professional experienced in working with educators can be vital. 3. Helping you avoid costly mistakes When going it alone, the potential for making mistakes is significant and could be expensive. An experienced financial professional can help you avoid these pitfalls, and help ensure you’re making choices that are right for you, and will get you on track toward your retirement goals. 4. Saving you money It’s simple. Financial professionals have more experience and less emotion when it comes to making tough financial decisions. A study by the financial research firm Financial Engines, showed that those who worked with a financial professional when planning for their retirement had a better experience and felt less stress than those who didn’t. 1 Source: Financial Engines & Aon Hewitt Find 401(k) Participants Who Use Professional Help Are Better Off Than Those Who Do Not 5. Saving you time Taking the do-it-yourself approach often involves things like monitoring investments and making adjustments in response to market conditions. This requires time and expertise few people have. An experienced financial professional can answer questions and help you navigate unexpected life changes, provide steady guidance in a volatile market and make adjustments as your goals and circumstances change. Yours is a noble profession benefitting the future of our society. It can also be sacrificial and thankless. We get it. It reminds us of a teacher’s story: A police car with flashing lights pulled me over near the high school where I teach. As the officer asked for my license and registration, my students began to drive past. Some honked their horns, others hooted, and still others stopped to admonish me for speeding. Finally the officer asked me if I was a teacher at the school, and I told him I was. I think you’ve paid your debt to society, he concluded with a smile, and left without giving me a ticket. You’re working hard to improve the future of the next generation, so let an experienced financial professional help you improve yours.