Archive for August 2017

Preparing for Retirement Income

We were recently asked this question, “I’m a few years out from retirement. What are some things I should be considering?”

It was a great question, and one that applies to all of us. With that in mind, we decided to share our answer with everyone.

As you prepare for your retirement, I encourage you to do the following:

  1. OUTGO:  Calculate your “needed” and “desired” retirement income
    • “Needed” income is what is absolutely necessary to maintain your life – giving, saving for known, upcoming non-monthly expenses (Christmas, vacations, property taxes, car maintenance/replacement, homeowner’s association fees, insurance deductibles, etc), food, car insurance, etc.
    • “Desired” income is what you would like to have in monthly income – it covers your “needed” income plus the extras you would like to be able to do throughout retirement
  2. INCOME:  Visit to determine your options
    • Upon establishment of your personal account, you will be able to see all of the available options including early retirement, full retirement, and delaying benefits until sometime past full retirement age.
  3. INCOME:  Determine other sources of income you expect to receive throughout retirement
    • Do you have any pensions?
    • Do you have any rental income sources?
    • Do you have any 401k, 403b, 457, TSP, Roth IRA, IRA, or other similar investments?
    • Do you have any assets (property, precious metals, business interest) you expect to sell to help fund retirement?
  4. Calculate your retirement nest-egg from multiple sources

It’s NEVER too early to start thinking about and planning for those retirement years!

How to Sustain Good Financial Decisions: AUTOMATE

We’ve all had moments where we have firmly stated our resolve to do something different with our money. Usually the outburst follows a negative financial outcome. Perhaps we’ve overspent on our vacation. Maybe we have the starting realization that there is no money in the college fund for our high school senior. It could be that we’ve dipped into the overdraft account again. Whatever the case may be, it causes us to commit to better financial management.

Here are some common statements people make in these moments:

  • “I’m going to start preparing a written budget each month.”
  • “I’m increasing my contributions to the retirement plan.”
  • “Let’s open a 529 college savings plan and begin making monthly contributions.”
  • “I’m cutting up the credit cards.”

There is just one problem with each of these statements: saying it doesn’t make it true.

For every statement and moment where we commit to better financial decisions, one must actually do the work to follow through. And, my friends, we all know that it is truly hard work. Life is so busy. We’re exhausted. Plus, many of these decisions require information and knowledge we may not currently possess. This is a recipe for failure to follow through on really good financial decisions.

And we’ve all been there, haven’t we?

Let’s flip the script, and put in place some “best practices” that can really help us sustain these good financial decisions so that we can reap the benefits they can provide us: fully funded lives, dreams accomplished, and freedom to live generously.

Sustain Good Financial Decisions – Practice #1:  AUTOMATE

Many good financial decisions can be followed through with automation! This is perhaps the easiest and best tip possible because it is literally a “set it and forget it” solution that ensures your financial decision is put into practice. If there is any possible way to automate your decision, do it.

Here are some great examples of using automation:

  • Committed to save money every month for the annual family vacation? Set up automatic drafts from your bill paying account to your savings account.
  • Want to help your child with college expenses? Open a 529 college savings account and establish automatic drafts.
  • Ready to up your retirement investments? Log in to your 401k (or similar RSP) account and adjust the automatic contribution.
  • Want to ensure your retirement money is put to work right away instead of sitting in a savings or money market account? Establish automatic investment selections.
  • Want to ensure all of your bills are paid on time? Automate every single bill payment. As an added bonus, you will spend far less time paying bills!
  • Want to ensure your retirement investments become more secure as you approach retirement? Choose a targeted retirement date investment fund that will automatically become less risky as you near retirement.

What good financial decisions have you been making that could leverage the power of automation to ensure they are sustained into the future?