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More Women Drive Financial Decision Making, But Fewer Seek Professional Advice

By default, single women have always taken responsibility for managing household wealth, but the latest in a series of ongoing studies into the attitudes and actions of women around financial topics found that an ever-increasing percentage of married women are taking charge of financial and retirement planning for their families.

Prudential’s “Financial Experience & Behaviors Among Women 2014-2015” — which surveyed more than 1,400 women aged 25 to 68 across all income levels and key ethnic groups — found that currently 27% of married women are in charge of household financial planning — up from 14% in 2006. Women also continue to contribute heavily to household income, with 44% reporting that they are the primary breadwinners for their families. This number has fluctuated in recent years, likely reflecting the evolving state of the economy.

Lingering Confidence Issues

Even as the economy improves and women step up their involvement in financial decision-making and goal-setting, their confidence in their ability to meet these challenges has remained virtually unchanged over the past 20 years. For instance, this year 75% of women said having enough money to live comfortably in retirement was “very important,” but just 14% were “very confident” they would achieve that goal. Similarly, 66% of women said being prepared for rising health care costs was a very important financial goal, but just 9% felt confident in their ability to do so.

Fewer Seeking Professional Help

Despite these realities, the number of women who seek the advice of financial professionals has declined dramatically in recent years. Just under a third (31%) of women interviewed for this study are currently working with a financial advisor — that’s down from 48% in 2008. With retirement fast-approaching Boomer women are most likely to use a financial professional (45%) followed by Generation Xers (31%) and Millennials (15%).

Overall, more than half (53%) of those who use advisors feel on track or even ahead of their plans with regard to saving for retirement, compared with just 23% of women who do not seek professional help.

The trend away from using advisors may be fueled, in part, by advances in technology that make financial information readily available 24/7 via smartphones, tablets, and PCs. Social media is also becoming a go-to resource for women seeking information about financial products and services. But the trend toward using online resources to educate and assist in decision-making is driven largely by age: 34% of Millennial women report using personal online financial management tools “sometimes” or “often” compared with just 18% of Baby Boomers.

What Women Want: Tough Advice for Advisors

When asked why they choose not to work with advisors, the primary reasons cited included not having enough assets to warrant professional guidance and high advisory firm fees. Women also voiced strong opinions about the financial services industry, indicating that firms need to simplify the process, use less jargon, put customers’ interests above their own, and exhibit ethical integrity. Among all potential customers — women and men alike — just 20% believe that financial services firms truly understand their needs.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Source/Disclaimer:

Prudential Financial, Inc., “”Financial Experience & Behaviors Among Women 2014-2015,” June 2014.

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Common Estate Planning Mistakes and How to Avoid Them

Estate planning can be a minefield of potential missteps, some of which could have far-reaching consequences. Many of the poor choices individuals make when planning for their own future or passing assets to their families are caused by “one-size-fits-all” planning strategies or well-intended advice from family or friends. Following are some common and potentially costly mistakes along with suggestions for avoiding them.

Failing to plan. Whether drafting a basic will or crafting an elaborate strategy involving trusts and tax planning, an estate plan can help reduce estate taxes, save on estate administrative costs and specify how your assets are to be distributed. Today, the majority of Americans have no will. If you die without one, your estate will be divided according to the intestacy laws of your state — not according to your wishes. This could create problems if your intended beneficiary is a minor child, a child with special needs, a favorite charity, or a combination of the above. In these cases, you need a will that details each contingency and a trust or multiple trusts to accomplish your goals.

Not maximizing your marital estate exemptions. Perhaps one of the most important pieces of tax legislation passed recently is referred to as the “portability” provision. This means that if one spouse dies without using up his or her federal estate tax exemption — $5.43 million in 2015 — the unused portion may be transferred to the surviving spouse without incurring any federal estate tax.

How might the portability provision work in a real life situation? Consider the following scenario involving the hypothetical $8 million estate of Jim and Helen:

If Jim dies in 2015, the executor of his estate can elect to use the unlimited spousal exemption and can also transfer Jim’s unused $5.43 million federal estate tax exemption to Helen. If Helen dies in 2015 with $8 million in assets, her estate will have a total of $10.86 million in federal estate-tax exemptions: the $5.43 million exclusion transferred from Jim and her own $5.43 million exclusion. As a result, none of Jim and Helen’s $8 million estate would be subject to federal estate tax.

As welcome as the portability provision may be, it still does not account for future appreciation of assets from the first spouse’s estate. Nor does portability offer protection from creditors and others aiming to lay claim on an estate’s assets. Traditional strategies like credit shelter trusts and bypass trusts do provide these benefits and therefore are still essential planning instruments for married couples.

Naming a family member as executor. Your executor is the person who will be responsible for administering your estate after death. The responsibilities of an executor are serious, and you will want someone who will take them seriously. There are many important reasons to choose a paid executor — a bank or trust company, for instance — along with (or instead of) a spouse or family member. A professional executor is familiar with the probate process and may actually save the family money, keeping expenses under control. This will undoubtedly be an emotional time for your loved ones, and a family member may find it difficult to focus on the details involved with settling an estate. In addition, when you name a family member, especially a beneficiary as executor, you introduce the potential for conflict of interest. The larger the estate, the more likely those conflicts become.

Relying on advice from family or friends. Would you go to a friend or relative for surgery or to fix your car if he or she was not a skilled surgeon or auto mechanic? Why would you take their advice about estate planning issues if they are not professional planners? When seeking a professional, look for a specialist — someone who knows trusts, estate tax law, and probate issues. A specialist will have more experience and skill in his/her chosen area — and that will translate into higher quality services provided in the most cost effective manner.

No set of rules or advice can apply in all cases, but a sure way to avoid these and other problems is to rely on a trusted team of tax and legal professionals led by your financial advisor.

This communication is not intended to be tax and/or legal advice and should not be treated as such. Each individual’s situation is different. You should contact your tax/legal professional to discuss your personal situation.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Marriage affects your ability to build wealth, plan for retirement, plan your estate, and capitalize on tax and insurance-related benefits.

Building Wealth

If both you and your spouse are employed, two salaries can be a considerable benefit in building long-term wealth. For example, if both of you have access to employer-sponsored retirement plans and each contributes $18,000 a year, as a couple you are contributing $36,000, far in excess of the maximum annual contribution for an individual ($18,000 for 2016). Similarly, a working couple may be able to pay a mortgage more easily than a single person can, which may make it possible for a couple to apply a portion of their combined paychecks for family savings or investments.

Retirement Benefits

Some (but not all) pensions provide benefits to widows or widowers following a pensioner’s death. When participating in an employer-sponsored retirement plan, married workers are required to name their spouse as beneficiary unless the spouse waives this right in writing. Qualifying widows or widowers may collect Social Security benefits up to a maximum of 50% of the benefit earned by a deceased spouse.

Estate Planning

Married couples may transfer real estate and personal property to a surviving spouse with no federal gift or estate tax consequences until the survivor dies. But surviving spouses do not automatically inherit all assets. Couples who desire to structure their estates in such a way that each spouse is the sole beneficiary of the other need to create wills or other estate planning documents to ensure that their wishes are realized. In the absence of a will, state laws governing disposition of an estate take effect. Also, certain types of trusts, such as QTIP trusts and marital deduction trusts, are restricted to married couples.

Tax Planning

When filing federal income taxes, filing jointly may result in lower tax payments when compared with filing separately.

Debt Management

In certain circumstances, creditors may be able to attach marital or community property to satisfy the debts of one spouse. Couples wishing to guard against this practice may do so with a prenuptial agreement.

Family Matters

Marriage may enhance a partner’s ability to collect financial support, such as alimony, should the relationship dissolve. Although single people do adopt, many adoption agencies show preference for households that include a marital relationship.

The opportunity to go through life with a loving partner may be the greatest benefit of a successful marriage. That said, there are financial and legal benefits that you may want to explore with your beloved before tying the knot.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Proper Financial Planning: Critical for Women

A key goal of investing for retirement is making sure you save enough to make your money last throughout your lifetime. On this score, women may need to save more than men. The current life expectancy of a female at birth is roughly 81 years, compared with 76 years for a male.1 Although five years may not appear significant, many people in this age group incur expenses for health care and other items while living off of Social Security and personal assets.

Keep in mind that life expectancy statistics are averages and many people live much longer. It is not unusual for an individual’s retirement to last 20 or 30 years or more. There is also the issue of the length of a person’s career and how much time an individual has to build retirement assets. Many women take time off for caregiving responsibilities, and during these years they may not add to their retirement portfolio.

In addition, time off from work may affect Social Security benefits because those who are not working do not earn credits that are used to determine retirement benefits. Also, parents, children, and other loved ones often have financial needs, and both women and men may provide help for family members, which may divert funds from retirement savings.

Estimating How Much You’ll Need

Of course, every woman’s life is unique and many women capitalize on the benefits available to them, including participating in an employer-sponsored retirement plan or funding an IRA, to build the assets needed for their later years. It’s important not to underestimate how much you may need or the importance of ongoing contributions to retirement accounts to build assets over time. Although there are no guarantees, the longer you stay invested, the more likely that your contributions may benefit from compounding, when investment gains are reinvested and potentially earn even more over time.

Your financial advisor can help you calculate how much you are likely to need for your later years. Be sure to consider how you will pay for health care expenses not covered by Medicare or other medical insurance. When considering sources of retirement income, log on to www.ssa.gov or review your annual statement to estimate your retirement benefit from Social Security. If you find that your retirement assets are coming up short, delaying retirement or saving more while you continue to work may be helpful strategies.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Source/Disclaimer:

1Source: Center for Disease Control, National Center for Health Statistics, 2014.

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Too Young to Think About Investing? Think Again!

“How did it get so late so soon?” — Dr. Seuss

Dr. Seuss’s whimsical take on life has been delighting children of all ages for generations. His simple, but powerful words continue to resonate today, even in the context of planning for a financially secure future. Because when you get right down to it, the younger you are, the more you potentially have to gain by taking advantage of the time ahead of you.

Compounding: A Snowball Effect

The word compounding describeswhat happens when your investment earns money and this amount is reinvested and generates more earnings. The process of compounding has often been compared to the way a snowball grows as it rolls downhill. You might say that a longer investment time frame is akin to a bigger hill, because each creates conditions for greater growth potential.

And thanks to the potential role of compounding, the more you invest, the more significant the potential long-term benefit. For example, assume that two workers both earn $30,000 annually. Each invests 6% of income and receives a 3% raise each year. Investor A never increases her investment, but Investor B increases her investment by 1% of income each year until she is eventually investing 12% of income. Over the course of 30 years, each account earns an 8% average annual investment return.

The result? At the end of the 30-year period, Investor A would have $296,864, whereas Investor B would have $535,005 — simply because she took advantage of time and gradually increased her investment amount.1

Time and Compounding — A Simple Equation

One easy way to estimate how long it may take for compounding to help double the value of an investment is to use the “rule of 72.”

Here’s how it works: Divide 72 by the rate of return earned by an investment. The number you end up with equals the approximate number of years it would take for the investment to double in value, assuming it continues to earn the same return. For example, an investment earning an 8% annual return would double in value in about nine years (72/8 = 9).

Stay in It for the Long Term

Maintaining a long-term time frame may also give you the luxury of being able to tolerate short-term market volatility. Because while past performance cannot guarantee future results, it’s worth noting that longer-term holding periods have often been associated with a lower likelihood of portfolio losses.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Source/Disclaimer:

1This is a hypothetical example intended for illustrative purposes only and does not represent the performance of an actual investment. Your results will vary.

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Readying Your Home for Old Man Winter

‘Tis the season … to be concerned about heating bills. Conserving fuel not only helps the environment, but also can potentially save you money. Here are some handy tips to help you do just that.

Did you know that you could save as much as 10% on your heating bill by reducing drafts in your home? Seal gaps along baseboards, add weatherstripping to windows and doors, and install rubber gaskets behind outlets and switch plates on exterior walls to help conserve heat. Another efficiency saver: Installing storm windows can save 25% to 50% on energy loss through single-pane windows.1

A big heat drain: Your home can lose up to 60% of its heat before it reaches the register if your ducts aren’t insulated and they travel through unheated areas. Seal air leaks by using heat-approved tape (look for the Underwriters Laboratories logo). Then, insulate ducts in unheated areas. Tip: Be sure a well-sealed vapor barrier exists on the outside of insulated cooling ducts to prevent moisture buildup. (When doing duct work, consider seeking the advice of a professional.)1

Simple Ways to Save                                                 

There are even easier ways to save heat — and money. For example, open drapes during the day to let heat in and close them at night to keep cold out. Think you could manage with a slightly cooler inside temperature? Turning the thermostat down 10% to 15% when sleeping can result in as much as 10% savings. Put it on autopilot by installing an automatic thermostat.1 Tip: Many utilities offer rebates for installing a programmable thermostat.

Though a fireplace is cozy, be sure to close the damper once the fire is safely out — leaving it open allows warm air to escape. Finally, check that drapes, furniture, or appliances aren’t blocking heating registers or vents.

All of these little steps could add up to big savings. Why not take some of that new-found money and put it toward your retirement nest egg? You can find other energy saving tips on the U.S. Department of Energy’s Web site at http://www.energy.gov.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Source/Disclaimer:

1Source: U.S. Department of Energy, 2011.

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Surviving the Holiday Spending Season … Debt Free

As the traditional giving season approaches, there is one important item to add to your to do list: Create a holiday budget. Before the gift shopping and wrapping begins, take control of your wallet through financial preparation. Remember, you can avoid the credit card crunch and the dangerous pitfall of borrowing against your company’s retirement savings plan or IRAs.

Here’s how to establish a holiday wish list and spending budget:

  • Start by determining the total amount of money that you want to budget for gifts. Carefully evaluate how much money your budget will allow for holiday spending. Be honest and be realistic. The idea is not to spend more than you plan for during the holiday season.
  • Next, make a list of people that you will be buying gifts for this year.
  • Write down ideas for each person on the gift buying list. Set an amount that you will spend for each person on the list, than estimate the cost of each gift idea. Create an alternative gift idea for each person if your first idea is too expensive.
  • After making the purchase, write down the exact cost of the gift, totaling your expenditures. Be sure to include the price of gift wrap and cards.
  • Prioritize your holiday wish list and consider your plans in light of your budget. You may have to choose between gift-giving, entertaining, or travel. Families can decide together how much to spend for the holidays, including gifts, decorations, and food.
  • Take a radical step to hide your credit cards. For example, put your credit cards in the freezer.
  • Don’t forget inexpensive gifts, such as themed baskets. An Italian gift basket can include a colander, spiral pasta, gourmet spaghetti sauce, a pasta spoon, and garlic bulbs.

Whether you celebrate Christmas, Chanukah, Kwanzaa, or even the Winter Solstice, you can make a commitment to sharing holiday presents with family and friends, attending your place of worship, and giving to your favorite charity, without worrying about credit card bills or repayment of bank or 401(k) loans.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

What Is the Difference Between a Traditional IRA and a Roth IRA?

There are some key differences between these two types of individual retirement accounts (IRAs). While the contribution limits are the same for both, each has its own specific rules and potential benefits (see table below).

It’s important to review both types of vehicles and plan your IRA strategy carefully. No matter which type you choose, make the most of your IRA by contributing to it regularly.

 

Traditional IRA Roth IRA
Contribution limits? For 2015, the maximum contribution is $5,500 ($6,500 for those aged 50 and older). Amounts are indexed annually for inflation. For 2015, the maximum contribution is $5,500 ($6,500 for those aged 50 and older). Amounts are indexed annually for inflation.

 

Contributions made with pre-tax or after-tax dollars?

 

Pre-tax or after-tax. After-tax only.
Contributions tax deductible? Yes, if the account holder does not already participate in an employer-sponsored retirement plan. Otherwise, the account holder must earn under the income thresholds set by the IRS. For 2015, a full deduction is allowed for single filers who earn less than $61,000 and joint-filing married couples who earn less than $98,000. Partial deductions are allowed for single filers earning between $61,000 and $71,000, and joint-filing married couples earning between $98,000 and $118,000.

 

No, Roth IRA contributions are not tax deductible.
Tax-free distributions? Not allowed. Distributions from a traditional IRA are taxed as ordinary income.* Allowed, provided the account owner is at least age 59½ and has held the account for at least 5 years.*

 

Required minimum distributions (RMDs) after age 70½? Yes, traditional IRAs are subject to RMDs, which require account holders to take annual distributions from the account after age 70½.

 

Not required.
Contributions after age 70½? Not allowed. Allowed, provided the account holder has earned income.

 

Types of investments allowed? A wide variety of options (including mutual funds, stocks, bonds, CDs, and ETFs), depending on the financial institution.

 

A wide variety of options (including mutual funds, stocks, bonds, CDs, and ETFs), depending on the financial institution.

 

 

Source/Disclaimer:

*Distributions made prior to age 59½ may be subject to a 10% additional federal tax.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Required Attribution Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2015 Wealth Management Systems Inc. All rights reserved.

Past Performance is Not an Indicator of Future Outcomes for 92.7% of Mutual Funds

“Past performance is not an indicator of future outcomes.”

That’s a variation of a disclaimer you’ll see in mutual fund marketing materials.

“Yet, due to either force of habit or conviction, investors and advisors consider past performance and related metrics to be important factors in fund selection,” S&P’s Aye Soe writes.

Specifically, investors will often find themselves attracted to the funds with the best track records, believing that there is some magic touch there that’ll result in persistent riches.

Unfortunately, data shows that the exact opposite is true.

92.7% of top performers fail to remain top performers after two years

Soe analyzed the performance of 641 actively managed domestic equity mutual funds, and she found some very unflattering stats.

Of the funds boasting top-quartile annual returns through March 2014, just 7.3% of those funds stayed in the top quartile in March 2016. To put it another way, 92.7% of the top-performing funds in 2014 failed to deliver top returns two years later.

“Furthermore, 8.5% of the large-cap funds, 3.26% of the mid-cap funds, and 0.68% of the small-cap funds remained in the top quartile.”

When you broaden it a bit to include the top half of performers, still just 27.4% stay in the top half after two years.

Winners become losers.
More

Just 0.3% of funds stay winners after five years

Soe’s analysis goes even further to see how the top performers of 2012 did through 2016.

Just 0.3% of those funds stayed in the top quartile in March 2016. To put it another way, 99.7% of the top-performing funds in 2012 failed to deliver top returns four years later.

It's almost a good idea to avoid the top performers.<img alt=”It's almost a good idea to avoid the top performers.” class=”StretchedBox W(100%) H(100%) ie-7_H(a)” src=”http://l1.yimg.com/ny/api/res/1.2/zh4bg18QWB.hq7MeQmNj8w–/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9NzQ0O2g9NDAy/http://media.zenfs.com/en/homerun/feed_manager_auto_publish_494/395abf9f01f5e492bdedbdcca04b071c”/>

View photos

It’s almost a good idea to avoid the top performers.
More

Like the literature says: “Past performance is not an indicator of future outcomes.”

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

Are You Prepared to Retire?

Retirement used to conjure up images of lazy days spent in a rocking chair. Today’s retirement is very different. You might plan to open a business of your own. Or perhaps you’ll return to school for that degree you never had the chance to complete. So what does this redefined retirement mean to you? There is no one answer. In the coming decades, “retirement” will mean something different to each of us. Regardless of your decision, you’ll need to design a financial plan suited to your specific vision of the future.

Income Is Key

A good starting point might be to examine your sources of retirement income. If you pay attention to the financial press, you’ve probably come across at least a few commentators who speak in gloom-and-doom terms about the future for American retirees, decrying a lack of savings and warning of the imminent growth of the elderly population.

True, there is widespread concern about at least one traditional source of income for retirees — Social Security. Under current conditions, Social Security funds could fall short of needs by 2033.1

This shift makes it even more important for individuals to understand their goals and have a well-thought-out financial plan that focuses on the key source of retirement income: personal savings and investments. Given the potential duration and changing nature of retirement, you may want to seek the assistance of a professional financial planner who can help you assess your needs and develop appropriate investment strategies.

As you move through the various stages of the new retirement, perhaps working at times and resting at others, your plan may require adjustments along the way. A professional advisor can help you monitor your plan and make changes when necessary. Among the factors you’ll need to consider:

  • Time: You can project periods of retirement, reeducation, and full employment. Then concentrate on a plan to fund each of the separate periods. The number of years until you retire will influence the types of investments you include in your portfolio. If retirement is a short-term goal, investments that provide liquidity and help preserve your principal may be most suitable. On the other hand, if retirement is many years away, you may be able to include more aggressive investments in your portfolio.
  • Inflation: While lower-risk fixed-income and money market investments may play an important role in your investment portfolio, if used alone they may leave you susceptible to the erosive effects of inflation. To help your portfolio keep pace with inflation, you may need to maintain some growth-oriented investments. Over the long-term, stocks have provided returns superior to other asset classes.2 But also keep in mind that stocks generally involve greater short-term volatility.
  • Taxes: Even after you retire, taxes will remain an important factor in your overall financial plan. If you return to work or open a business, for example, your tax bracket could change. In addition, should you move from one state to another, state or local taxes could affect your bottom line. Tax-advantaged investments, such as annuities and tax-free mutual funds, may be effective tools for meeting your retirement goals. Tax deferral offered by workplace plans — such as 401(k) and 403(b) plans — and IRAs may also help your retirement savings grow.

Prepare Today for the Retirement of Tomorrow

To ensure that retirement lives up to your expectations, begin establishing your plan as early as possible and consider consulting with a professional. With proper planning, you may be able to make your retirement whatever you want it to be.

Source/Disclaimer:

1Source: Social Security Administration, The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, July 2014.

2Past performance is no guarantee of future results. Stock investing involves risk including loss of principal.

Alan Sweeten, MS, CFP ® ,CRPS®
CERTIFIED FINANCIAL PLANNER ™
Chartered Retirement Plans Specialist

alan@sweetenwm.com/ Cell (760) 460-6509 / Phone (800) 841-2796
http://www.sweetenwm.com/ North County Financial Planner

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