Wise Decisions with Retirement in Mind

Certain financial & lifestyle choices may lead you toward a better future.

  

Some retirees succeed at realizing the life they want, others don’t. Fate aside, it isn’t merely a matter of stock market performance or investment selection that makes the difference. There are certain dos and don’ts – some less apparent than others – that tend to encourage retirement happiness and comfort.

Retire financially literate. Some retirees don’t know how much they don’t know. They end their careers with inadequate financial knowledge, and yet feel that they can plan retirement on their own. They mistake retirement income planning for the whole of retirement planning, and gloss over longevity risk, risks to their estate, and potential health care expenses. The more you know, the more your retirement readiness improves.

   

Retire knowing that you’ll have to assume some risk. Growth investing is increasingly seen as a necessity for retirees who want to keep ahead of inflation.

 

According to data and research compiled by the Social Security Administration, the average 65-year-old man will live to be 84 and the average 65-year-old woman will live to be 86. So that’s a 20-year retirement. The SSA also notes that roughly a quarter of today’s 65-year-olds will live past 90, and about 10% of them will live beyond age 95.1

   

If these seniors rely on fixed-income investments for the balance of their lives, they may end up with reduced retirement income potential, and in turn a reduced standard of living. Look at the Rule of 72: if an investment is yielding 2%, it will take about 36 years to double your money. Yes, interest rates are rising – but inflation should rise with them.2

 

A generation ago, mature Americans were urged to gradually shift their portfolio assets out of stocks and into fixed-income investments. One old rule of thumb was to subtract your age from 100, with the resulting number being the percentage of your portfolio you should assign to equities.3

 

Today, retirees and retirement planners are reconsidering this thinking. As the Wall Street Journal reported recently, one study of retirement money and longevity risk concluded that retirement funds may last longer if a retiree gradually increases the stock allocation within a portfolio about 1% per year from an initial range of between 20-50% to between 40-80%. The concept here is that a retiree’s stock allocation should be lowest when their retirement nest egg is largest.3

 

Retire debt-free, or close to debt-free.  Who wants to retire with 10 years of mortgage payments ahead or a couple of car loans to pay off? Even if your retirement savings are substantial, what will big debts do to your retirement morale and the possibilities on your retirement horizon? On that note, refrain from loaning money to family members and friends who seem quite capable of standing on their own two feet.

 

If the thought of using some of your retirement money to pay outstanding debts hits you, set that thought aside. You have dedicated that money to your future, not to bill paying. On second or third thought, other sources for the cash may be apparent.  

 

Retire with purpose. There’s a difference between retiring and quitting. Some people can’t wait to quit their job at 62 or 65 – their work is “killing” them, or boring them senseless.  If only they could escape and just relax and do nothing for a few years – wouldn’t that be a nice reward? Relaxation can lead to inertia, however – and inertia can lead to restlessness, even depression. You want to retire to a dream, not away from a problem.

 

A retirement dream can become even more captivating when it is shared. Spouses who retire with a shared dream or with utmost respect for each other’s dreams are in a good place.

 

The bottom line? Retirees who know what they want to do – and go out and do it – are contributing to their mental health and possibly their physical health. If they do something that is not only vital to them but important to others, their community can benefit as well.

      

Retire healthy. Smoking, drinking, overeating, a dearth of physical activity – all these can take a toll on your capacity to live fully and enjoy retirement. It is never “too late” to quit smoking, quit drinking or slim down.

 

Retire in a community where you feel at home. It could be where you live now; it could be a place hundreds or thousands of miles away where the scenery and people are uplifting. It could be the place where your children live. If you find yourself lonely in retirement, then “find your tribe” – look for ways to connect with people who share your experiences, interests and passions, and who encourage you and welcome you. This social interaction is one of the great intangible retirement benefits. 

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – ssa.gov/planners/lifeexpectancy.htm [2/6/14]

2 – investopedia.com/terms/r/ruleof72.asp [2/6/14]

3 – tinyurl.com/m8akefj [2/3/14]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Chevron,  
AT&T, Qwest,Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Why 2014 May Be a Very Good Year

More improvement may be in store for the economy & the stock market.

  

Will the economy & the bull market make further strides next year? On both Wall Street and Main Street, 2013 has turned out better than many analysts expected. Will the recovery gain additional momentum in 2014, and will stocks climb even higher?

Optimism is widespread. Do you remember how gloomy things got at the end of 2012? Fears about imminent economic damage from the fiscal cliff and sequester cuts were pervasive, and bears sensed that stocks might retreat. The economy and the market withstood these anxieties and others. Look at last week for another example. Hours after the Federal Reserve announced it would scale back its asset purchases next year, the Dow closed at a fresh all-time high of 16,167.97. December 18 was the index’s best day in more than two months.1

Weren’t investors supposed to be disappointed when the taper occurred? Let’s just say the timing was right. In August, just the hint of an oncoming taper resulted in a 5.6% dip for the Dow. Months ago, some investors were still questioning the strength of the recovery. Today, there is less to question. As Wells Capital Management chief investment strategist James Paulsen commented in USA TODAY, the Fed’s move amounted to a “vote of confidence in the future,” mirroring the confidence on Wall Street.1

The taper to QE3 was relatively small ($10 billion) and came with a pledge to hold interest rates down “well past the time” unemployment declines to 6.5%. So the Fed likely intends to maintain its accommodative stance for some time, which is just fine by investors. (In fact, the Wall Street Journal says that only two of ten Fed officials believe the central bank will raise interest rates next year.) The Fed’s monetary policy has been instrumental to the stock market’s record-setting performance, and it isn’t going away – which is good news for 2014.1,2

Easing isn’t the only thing powering this bull market. The unemployment rate fell to 7.0% in November, a 5-year low. It was 7.9% in January. The economy is projected to generate 2,269,500 new jobs in 2013, and assuming it does, this will be the fourth straight year with a gain in annual job creation. The Fed sees GDP improving more than half a percentage point to 2.8-3.2% in 2014 and growth of 3.0-3.4% for 2015. Housing starts have doubled in the past four years and rose 22.7% in November to a 5½-year peak. The most recently released Case-Shiller Home Price Index (September) showed a 13.3% overall annual gain in home values, and even though year-over-year existing home sales declined in November for the first time in 29 months, the National Association of Realtors said existing home prices had improved 9.4% in a year.2,3,4,5,6,7

 

The global outlook may also improve. Economists at China’s National Academy of Economic Strategy feel that the PRC will maintain GDP of about 7.5% this year and see as much as 7.8% growth in 2014. Citing Eurostat and Bloomberg research, Money reports that the eurozone economy is projected to grow about 1.4% per year for the next 3-5 years, notably better than the annual 0.2% pace of expansion recorded so far in this decade.4,8

 

No one is saying there won’t be challenges or surprises next year, and stock market gains in 2014 may not approach those we have seen in 2013. That said, many indicators are signaling that next year could hold considerable promise for both Wall Street and Main Street.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – usatoday.com/story/money/markets/2013/12/18/five-reasons-why-stocks-rose-despite-taper/4114075/ [12/18/13]

2 – blogs.wsj.com/economics/2013/12/18/fed-projections-see-no-rate-increase-until-2015/ [12/18/13]

3 – ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx [12/19/13]

4 – money.cnn.com/2013/12/09/news/economy/economic-outlook-2014.moneymag/index.html [12/10/13]

5 – reuters.com/article/2013/12/18/idUSLNSINE9BF20131218 [12/18/13]

6 – bostonglobe.com/business/2013/12/01/five-financial-trends-thankful-for/3FyGVa4OpIZNKlNSzHwIbO/story.html [12/1/13]

7 – mortgagenewsdaily.com/12192013_existing_home_sales.asp [12/19/13]

8 – usa.chinadaily.com.cn/business/2013-12/10/content_17162933.htm [12/10/13]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, 
 AT&T, Qwest, Chevron,Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

2014 IRA Deadlines Are Approaching

2014 IRA Deadlines Are Approaching

Here is what you need to know for 2014.

 

Financially, many of us associate April with taxes – but we should also associate April with important IRA deadlines.

*April 1 is the absolute deadline to take an initial IRA Required Mandatory Distribution (RMD).

*April 15 is the deadline for making annual contributions to a traditional or Roth IRA.1,2,7

Let’s discuss the contribution deadline first, and then the deadline for that first RMD (which affects only those IRA owners who turned 70½ last year).

The earlier you make your annual IRA contribution, the better. You can make a yearly Roth or traditional IRA contribution anytime between January 1 of the current year and April 15 of the next year. For example, you can make your IRA contribution for 2014 anytime from January 1, 2014-April 15, 2015.  The IRA contribution window for 2013 is January 1, 2013- April 15, 2014.1

So you have more than 15 months to make your IRA contribution for a given year. But why wait? Savvy IRA owners pour new money into their accounts each January – as early as they can – to give those dollars more months to grow and compound. (After all, who wants less time to amass retirement savings?)

You cut your income tax bill by contributing to a deductible traditional IRA. That’s because you are funding it with after-tax dollars. To get the full tax deduction for a 2014 traditional IRA contribution, you have to meet one or more of these financial conditions:

*You aren’t eligible to participate in a workplace retirement plan.

*You are eligible to participate in a workplace retirement plan, but you are a single filer with adjusted gross income of $59,000 or less. (Or if you file jointly with your spouse, your combined AGI is $95,000 or less.)

*You aren’t eligible to participate in a workplace retirement plan, but your spouse is eligible and your combined 2014 gross income is $178,000 or less.2,3

If you are the initial owner of a traditional IRA, by law you are required to stop making contributions to that IRA starting in the year you turn 70½. If you are the initial owner of a Roth IRA, you can contribute to it as long as you live.4

If you are making a 2013 IRA contribution in early 2014, be aware of this fact. You must tell the investment company hosting the IRA account what year the contribution is for. If you fail to indicate the tax year that the contribution applies to, the custodian firm may make a default assumption that the contribution is for the current year (and note exactly that to the IRS).1

So, write “2014 IRA contribution” or “2013 IRA contribution” as applicable in the memo area of your check, plainly and simply. Be sure to write your account number on the check. Should you make your contribution electronically, double-check that these details are communicated.

How much can you put into an IRA this year? You can contribute up to $5,500 to a Roth or traditional IRA for the 2014 tax year (just as you could for the 2013 tax year). If you have multiple IRAs, you can contribute up to a total of $5,500 across the various accounts. Should you contribute in excess of $5,500, you will not be rewarded for it: you have until the following April 15 to correct the contribution with the help of an IRS form, and if you don’t, the amount of the excess contribution will be taxed at 6% each year the correction is avoided.5

If you earn a lot of money, your maximum contribution to a Roth IRA may be reduced because of MAGI phase-outs, as follows.6

2013 Tax Year                                                                    2014 Tax Year

Single/head of household: $112,000-127,000              Single/head of household: $114,000-129,000

Married couples: $178,000-188,000                              Married couples: $181,000-191,000

You can’t make a Roth IRA contribution if you are married filing separately with MAGI of $10,000 or more and lived with your spouse in any part of a year.6

A last-chance RMD deadline rolls around on April 1. If you turned 70½ in 2013, the IRS gave you a choice: you could a) take your first Required Minimum Distribution from your traditional IRA before December 31, 2013, or b) postpone it until as late as April 1, 2014.7

If you chose b), you will have to take two RMDs this year – one by April 1, 2014 and another by December 31, 2014. (For subsequent years, your annual RMD deadline will be December 31.) The investment firm hosting your IRA should have already notified you of this consequence, and the RMD amount(s) – in fact, they have probably calculated the RMD(s) for you.7

Original owners of Roth IRAs will never face this issue – they are not required to take RMDs.7

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – taxmap.ntis.gov/taxmap/pubs/p590-005.htm [1/16/14]

2 – turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/Tax-Tips-After-January-1–2014/INF12070.html [3/8/13]

3 – money.cnn.com/retirement/guide/IRA_traditional.moneymag/index2.htm [1/16/14]

4 – money.cnn.com/retirement/guide/IRA_Roth.moneymag/index3.htm [1/16/14]

5 – finance.yahoo.com/news/over-contributed-ira-401-k-151500104.html [1/2/14]

6 –  irs.gov/publications/p590/ar01.html [2013]

7 – foxbusiness.com/personal-finance/2014/01/02/missed-your-ira-rmd-deadline-here-what-to-do/ [1/2/14]

 

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Albert Aizin is a Representative with FSC Securities and maybe reached at http://www.theretirementgroup.com.