Goldstone Financial Group: 3 Ways To Think Like a Quarterback In Your Retirement Strategy

Goldstone Financial Group: 3 Ways To Think Like a Quarterback In Your Retirement Strategy

Apt comparisons can be made between athletics and finance — even in terms of retirement strategies. Though retirees should have a trusted financial ‘coach’, the strategies and final decisions during game time is up to the quarterback — you. Brad Johnson, a former football player and current VP of Advisor Development, offered the three insights into how he turned his passion for football into a successful career as one of the foremost finance advisors.

Bend don’t break

Expect some losses but don’t accept them all. During volatile markets, investors oftentimes take flight. In long-term investing, this is the worst thing a retiree can do for themselves and the economy. If you can’t see past the burning forest, make sure you have a great team on your side to help advise you. If certain investments are “broken”, they should be able to steer you towards safer ground.

According to Brad Johnson, staying the course is the best way to ride out the volatility:

There was a saying we had as a defensive unit back in college when I was playing, “bend but don’t break” and I think it relates incredibly well to the mentality most retirees should take with their savings. You see in football it meant you can give up a first down or two on defense, just don’t give up the 60 yard [sic] bomb over your head or the big run down the sideline for a touchdown.

Don’t have all your players in one place

As mentioned in an earlier blog, much of the last 60 years of “tried and true” investing no longer reaps the rewards seen in decades before, however, one thing that does remain is diversification. Retirees should not be afraid of making certain risks but having a diversified portfolio, like diversifying your best players is a great tactic to employ. Using diversified retirement strategies like hybrid fixed annuities, IRAs, Roth IRAs, and the strategies mentioned here for retirement will spread out your best players.

Recalls Johnson:

This was drilled into us by our coaches and by making sure everyone was playing their position and role within the defense.

What’s interesting is that this exact same philosophy applies incredibly well to retirement and the need for utilizing tools within your retirement that all play a certain role. Just as you wouldn’t have an entire football team made up of 11 running backs, for most retirees they shouldn’t have an entire retirement nest egg made of high risk/high reward equities.

Have a good defense

As we’ve all heard many times: a good offense is a great defense. This also applies to retirement. The most prized asset in your financial portfolio is a Plan B. In other words, always prepare as much as possible. Your knowledgeable advisor is your best defense against making decisions based on misguided or incorrect intel. They should have the answers to your burning questions because they’ve played the game a lot more than you have! So don’t be afraid to confer with your coach.

With the help of your advisor, there are ways to implement safeguards that can help you grow and keep your money. In the words of Mr. Johnson, these advisors are a crucial way to keep all your “eggs” intact:

Going back to the “bend but don’t break” mindset, this is what sent many retirees looking for a part time job or caused them to delay retirement back in 08-09. Essentially their nest egg “broke” when the market was cut in half.

There are a number of tools available to help[s] create a sustainable base for income through retirement that help shield retirees from this risk – think of them like the offensive linemen on a football team, they don’t get much glory, but no football team could survive without them!

Like Brad Johnson, a financial advisor can help coach a retiree into strategizing the best retirement plan that will help them score a “touchdown” as Johnson puts it. At the end of the day, it is your retirement, your game so to speak; but with a keen knowledge of the playing field and a strong supporting team, a retiree can get to their end zone with a win.

 

Goldstone Financial Group: How Investing in Annuities Can Boost Retirement Confidence

Goldstone Financial Group: How Investing in Annuities Can Boost Retirement Confidence

According to the Employee Benefit Research Institute, 37 percent of workers are confident that they have enough money saved up for retirement. The EBRI’s 2015 Retirement Confidence Survey reveals confidence about having enough money for retirement has increased steadily after reaching record lows between 2009 and 2013, but today’s numbers reveal that less than half of working America is still unsettled or even anxious about their financial future.

Fortunately, there are several attractive options available for soon-to-be retirees. Those who are within a decade or two of retirement may be especially interested in purchasing annuities, which can be a valuable addition to retirement planning.

What Are Annuities?

Annuities are a unique type of financial product because unlike savings and investments you would set up with a bank, annuities are sold by insurance companies and financial institutions. When you buy an annuity, you are socking away money for a few years that you don’t expect to touch until the surrender period — the length of the annuity — is over. Although, most annuities allow up to 10% to be withdrawn annually during the surrender period.

One of the reasons why people buy Fixed Indexed Annuities is because they are looking for a no-risk or low-risk investment opportunity and want to protect their hard-earned money from income taxes. If you have already made your full contributions to 401(k) plans and IRAs and have some extra money available for retirement, you may consider purchasing an annuity. You can buy an annuity for several thousand dollars and earn tax-free interest as long as you don’t make any withdrawals during the surrender period. Of course, you will need to consider the fee structure and overall cost of your annuity before signing the dotted line. In many cases, annuities earn higher interest than bank CDs and savings accounts.

Generating Income with Annuities

You get to play investor when purchasing annuities and can choose from several different types — including multi-year fixed income annuities (MYGA) where you receive a guaranteed payout or a variable annuity where you receive a payout based on performance. Variable annuities, naturally, are riskier investments but offer more attractive returns.

If you want to receive payments as soon as you make your investment because you are very close to retirement or are already retired, an immediate annuity will be your best option. If you are comfortable leaving your account alone to earn interest that you can enjoy later, you can purchase a deferred annuity to defer your payment to a certain time.

When exploring different types of annuities, it’s important to consider what type of insurance company is guaranteeing the plan, what types of costs are involved, and what stipulations there are for termination of your annuity contract.

As many Americans struggle with the idea of not having enough saved up for retirement or wonder if they will be able to get by on Social Security and pension funds during retirement, it’s never too late to start planning for the future. If you are looking for financial products for our retirement strategy, don’t overlook the benefits of annuities. Tax-free earnings and flexible buying and earning options make annuities an attractive option for soon-to-be retirees and those who are already in their retirement years.

Goldstone Financial Group: The Biggest Problem People Have When Planning for Retirement, According to Data

Goldstone Financial Group: The Biggest Problem People Have When Planning for Retirement, According to Data

An HSBC survey found that only 40 percent of Americans are regularly saving money for their retirement. Additionally, two other surveys from the Consumer Federation of America (CFA) and Employee Benefit and Research Institute (EBRI), reveal that only about 50 percent of those Americans have focused retirement goals and around 40 percent are saving for a realistic, sustainable standard of living.

To many, the biggest obstacle is obtaining accurate advice about the options, risks, and benefits of retirement savings, but that is just one of the problems facing retirees today. There are 5 other major struggles:

No Employer 401(k)

An EBRI analysis of a recent Census Bureau data reported that under 50 percent of employed Americans have access to a retirement plan at work. Of those that do have access to a 401(k), only about 40 percent participate. According to President & CEO of EBRI Dallas Salisbury, this 40 percent are really missing out. “Those who have workplace programs and are participating, they are doing significantly better than those who are not.”

If you have access to an employer-sponsored retirement plan, we can’t stress enough what a valuable asset that is to your future. For those who don’t have this option, IRAs are a good place to put aside money.

Unforeseen Life Events

Even retirees who are careful about for their futures face unexpected life events such as deaths, life-threatening illnesses, and accidents. When this happens, what we often see is retirees ceasing to contribute to their accounts, or borrowing against their retirement due to costs associated with these unforeseen events. According to the HSBC, 27 percent who face these struggles say they would borrow against their savings, 13 percent were prevented from working due to accident or illness, and 6 percent ceased working to care for a spouse, therefore unable to afford monthly contributions.

Executive VP of retail banking and wealth management at HSBC Bank USA Andy Ireland reportedly stated that though retirement funds are a great nest egg for the future, they can also be a liability when life emergencies happen.

“Retirement savings are vulnerable to being raided to deal with serious financial hardship resulting from unforeseen life events.”

Debt

According to data from NerdWallet, the average American household has over $15K of credit card debt and over $130K in total debt. If broken down per year, each household is paying out nearly $7K in interest alone. To compound the debt problem further, the median household income has shown negligible gains while household debt continues to rise.

When retirees are trapped in this cycle of debt, they are often too busy keeping up with credit card, mortgage, and other varying payments to contribute to retirement funds. For those who are buried in debt, there are ways to effectively dig out as detailed in our previous blog post 6 Ways To Improve Your Relationship To Your Money. Though getting out of debt is no small feat, taking little steps right away can lead to a light at the end of the tunnel.

“Underemployment” and Employment Instability

According to the U.S. Bureau of Labor Statistics, unemployment has fallen to a 5 percent, but the statistics don’t tell the whole story. “Underemployed” individuals (those who can’t find full-time employment) are actually at 10 percent. Since the financial recession in 2008, many Americans are struggling to reach financial stability, often living hand-to-mouth and unable to save.

According to an article on MarketWatch:

“Those who once enjoyed a modicum of financial stability have settled into a new normal of ongoing financial vulnerability, while the struggles of those who were financially insecure before the recession have only deepened.The number of households below the poverty line has barely budged and millions of low- and moderate-income people live paycheck to paycheck.”

The Retiree

GoBankingRates research revealed that 1 in 3 Americans have a startling zero dollars saved up for retirement. In other words, one of the biggest obstacles to a robust retirement fund is the retiree.

Many retirees consider thinking about setting up retirement funds as an obstacle. This thinking is most likely lack of education according the GoBankingRates’ Kristen Bonner. Finding and obtaining that education can be a difficult challenge, especially for Americans who are already facing all the other obstacles we’ve just detailed. The daunting task of navigating the options of retirement can seem impossible; but employing a trustworthy retirement advisor greatly decreases the stress.

When attempting to get better at ensuring you will have a better quality of life in retirement age, obstacles can come in many forms, but the most detrimental is the belief that getting information about your options is impossible. If a retiree can first ask for help from a reliable source, preparation to combat the other obstacles can begin.

Goldstone Financial Group: How Confident Are Retirees That They’ve Saved Enough?

Goldstone Financial Group: How Confident Are Retirees That They’ve Saved Enough?

Many people spend most of their working years setting aside money in a retirement account. Whether this happens in the form of independent 401(k) contributions, employer benefits, IRAs, pension plans, or a combination of savings strategies, Americans have plenty of options available to build up their retirement fund during their working years. However, a recent GoBankingRates survey reveals that 23% of Americans have less than $10,000 saved for retirement and one-third of Americans report that they have no retirement savings at all. This means more than half of Americans have barely saved anything for retirement. So how confident are today’s retirees about their financial future? Here’s a closer look:

Making the Decision to Retire

One of the first things Americans need to consider as they approach retirement age is when they want to officially retire, or stop working and earning a paycheck. This is where the retiree would live off Social Security benefits, a pension plan, and any personal savings they have accumulated over the years. The full retirement age is 67 for those who were born in 1960 or later but it’s important to note that those who delay retirement until age 70 can qualify for more Social Security benefits. Deciding when to retire to claim Social Security benefits and when to stop earning money is important for financial planning since these decisions will influence how much money the retiree can save and enjoy during retirement.

Building Retirement Savings

Individual retirement accounts (IRAs) and 401(k) accounts are some of the most popular types of retirement plans among working Americans but there are several other options available for those looking to generate a steady stream of income through their retirement years. Getting the maximum 401(k) match from an employer through all working years is a smart way to build up retirement savings. Working for employers that contribute to Simplified Employee Pension (SEP) plans and Salary Reduction Simplified Employee Pension (SARSEP) Plans is another way to increase retirement savings.

Contributing to a Traditional or Roth IRA consistently over several years and decades will provide an attractive return on investment as long as the account holder doesn’t make any early withdrawals. Buying fixed-rate annuities before reaching retirement age or even during retirement can help to secure a guaranteed revenue stream for years to come. While these annuities provide a fixed income stream, it’s important to keep in mind that they will not adjust for inflation over the years. Those who want to take advantage of any signs of growth in the market may fare better with variable annuities. Working with an experienced financial planner can help to determine investment priorities and create an attractive retirement portfolio.

Low Confidence in Retirement

AARP recommends calculating living costs at 70 to 80 percent of preretirement income but many financial planners suggest planning for 100 percent of preretirement income for at least the first 10 years after leaving the workforce. According to the Employee Benefit Research Institute, 24% of workers were not at all confident that they had saved enough money for retirement while 36% were somewhat confident, as of 2014. Whether they’ve lived a long life of struggling financially and never made room for savings or simply had other financial priorities, it’s clear that many retirees cannot expect to live comfortably without a paycheck or other sources of income. Some may end up depending on family members for financial support while others will continue working during retirement to pay for basic expenses.

Individuals approaching retirement age who plan to work and earn through their retirement years may be able to recover any missed savings opportunities from their youth. Prioritizing finances and making an effort to cut costs can also help to reduce living expenses and maximize a retiree’s savings potential. With so many retirees dissatisfied with their retirement nest egg — and many without any retirement savings at all — it’s important for all Americans to make retirement planning a priority at an early age.