Thanks to advances in medical technology, folks are generally living longer. This is great news. But it also doubles as an action item for investors, because the longer you live, the more you’ll need saved to provide for your spending needs in retirement. The question then becomes, what is the best way to calculate your life expectancy so you can plan retirement accordingly? When Planning for Retirement, Use a Conservative Estimate for Life Expectancy Everyone can likely agree that when it comes to retirement planning, it’s better to have saved too much than too little. By making a conservative estimate of you and your spouse’s life expectancies, you encourage yourself to save more and invest for longer, so that you can secure your income and spending needs throughout a long retirement. It’s a smart approach. [+] Read More

When thinking about retirement income planning at a high level, it boils down to two main considerations: what are your retirement income sources, and what are your retirement income needs? Answering these questions is an important first step towards creating your retirement income strategy. What are Your Retirement Income Sources? We’ve written before about potential strategies to maximize social security payments, which can help to provide a supplemental boost to your retirement income. But for many investors, a main source of retirement income comes from their investment portfolios. Dividend paying stocks, dividend focused portfolio strategies, fixed income allocations, or selling stocks/portfolio holdings to raise cash are all ways investors can generate income in their investment portfolio. [+] Read More

For investors who are at or near retirement, we believe two fundamental questions should almost always be asked: “do you have enough money to support your needs for spending in retirement, and, will your family be taken care of if you pass away?” In a previous post, we wrote about how to check to make sure you have saved enough to meet your retirement income needs. Now the question turns to, “do you have enough saved to support your spouse and family as well? Start with an Estate Planning Checklist An estate planning checklist can help you get organized and have a clearer picture of how prepared you are for retirement. Running through an estate planning checklist encourages you to inventory your assets and debts, update your beneficiaries to make sure the assets go to the right places, and formalize everything through legal documentation. Once you’ve done that, you can get to answering the question posed in this piece: “is your nest egg big enough to support your family?” Investors should address this in two parts: [+] Read More

The world’s largest asset manager, Blackrock, conducted an investor survey in 2013, asking 17,600 people in 12 countries how they felt about the markets and their personal financial situations. There are a lot of data points to consider, but one in particular stood out to us: about 50% of respondents are concerned they are going to outlive their savings.1 Many of these respondents could feel concerned simply because they don’t know where they stand. An investment plan can provide a little clarity (and perhaps a wake-up call) to investors wondering if their nest egg is going to last throughout retirement. Think of an investment plan as a manual, there to help you keep track of your progress toward building a successful retirement. What Exactly is an Investment Plan? An investment plan is a comprehensive report that takes a detailed view of an investor’s assets, liabilities, current spending needs, future spending needs, investments, asset allocation, and goals, and uses all of that information to project/estimate how “on-track” an investor is to reaching their objectives. [+] Read More

Before we discuss the three items, we’d like to be clear about something first and foremost—there’s nothing really “magic” about a “magic number.” Many investors place a lot of focus on setting a “magic number” (the amount of assets that, in theory, gives a person the ability to retire while maintaining the same standard of living and meeting all of their needs) and reaching it, but it’s important to understand that reaching that number in and of itself doesn’t solve every retirement income need. An investor has to constantly assess their asset levels relative to their needs throughout retirement. 3 Important Factors to Determining a Retirement Nest Egg Target 1) Be Conservative When Establishing Your Life Expectancy According to the Social Security Administration, a man reaching 65 today can expect to live, on average, until age 84. For a woman, that number is 86. But those are just averages—about one in every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. [+] Read More

During our working years, the amount of income we earn is ultimately what shapes the spending and lifestyle choices we make. Over time, we become accustomed to living a certain way and having certain resources available to us and our families. These parameters are what create a person’s standard of living. Retirement is different, of course, since we derive retirement income in different ways and from different sources. As a person makes the shift from the working world to the retirement world, an important question must be addressed: do you have the resources and assets needed to maintain the same standard of living in retirement as you did during your working years? Is your nest egg big enough? Almost Half of American Households Won’t Have Enough Retirement Income Research suggests that when it comes to maintaining a standard of living during retirement, many investors could be in trouble. [+] Read More

An investment plan is a tool you can use to help you understand where you stand in retirement at every step of the way. Are you still on track to reach your retirement goals? How likely is it you be able to maintain your current lifestyle throughout retirement? Can you afford your current and potential healthcare costs? How much will you be able to leave behind for your loved ones? A well-constructed investment plan can give you a good sense of the answers to these questions. Instead of figuring it out as you go, you can examine a variety of outcomes to help you make more informed choices. Factoring Spending Goals into Investment Plans Before you can use an investment plan to help monitor your spending in retirement, it’s important to provide detailed answers to some fairly basic questions: what are your income needs/desired income in retirement? How might those needs change over time? [+] Read More

As we enter the New Year, many folks will set out to focus more attention on their health and wellbeing. Indeed, the month of January experiences almost 50% more gym membership sign ups than other months. According to the International Health, Racquet, and Sportsclub Association, “more than 12 percent of gym members join in January, compared to an average of 8.3 percent per month for the full year.”1 While improving your personal health is a wonderful goal, we are encouraging investors to put more time and energy into strengthening their financial health. Taking a fresh look at your investment plan—or creating one for the first time—is a great way to get started. Four Steps to Strengthen the Health of Your Investment Plan Taken together, the below four steps can help put you on a better path to knowing where you stand financially, relative to your long-term goals. Try you to review these four things in detail with your financial advisor. If you don’t have one, it could be a good opportunity for you to seek one out, using this process as a means to evaluate the type of job a financial advisor could do for you. [+] Read More

The short answer is no, according to a recent study conducted by the Center for Retirement Research at Boston College. Data in the study suggests that the gap between what people have saved, versus what they need for retirement, is quite significant and by any measure staggering. The funding gap is $6.6 trillion.1 The study examines several reasons why many investors are underfunding their retirement, but three factors stand out as particularly influential. When reviewing these findings below, it’s important for investors to weigh them respective to their own savings and investment plans, including how much retirement income they’ll need, in order to help determine how prepared they are for retirement. Three Reasons Why Nest Eggs Aren’t Big Enough 1) Investors Aren’t Saving Enough Some investors haven’t saved enough simply because they never determined how much they actually needed for retirement. This involves speaking with a financial advisor about what your retirement income needs are, and then determining an appropriate savings level and a desired return on investments over time needed to get there. [+] Read More