6 ways to fraud-proof your retirement savings

You’ve worked hard for your retirement savings – don’t be defrauded out of them!

According to Steve Vernon, “Fraudsters target people of all ages, but older adults with retirement savings are particularly lucrative targets. And the consequences of fraud and exploitation can have a devastating impact on older adults who depend on their retirement savings after they leave the workforce.”  Read more about the issue, and the solutions, to safeguard your savings.
 

Spring Cleaning for your Retirement Plans!

OK, so it’s only barely still Spring, but the concept holds true.  This is a great time to review your retirement savings plans with your company’s financial advisor.

 
What do your house and your 401(k) have in common? Both may need some spring cleaning, according to our friends at American Funds.
 
A lot can change in a year. Your closet might be filled with clothes you no longer wear. Appliances might need fixing or replacing. Likewise, your 401(k) investments or contributions may no longer fit your retirement objectives.
 
“The circumstances of our lives are constantly changing,” says Ken Burdick, senior product specialist at American Funds. “So you want to check in from time to time to make sure your investment strategy still makes sense.”
 
That’s why it’s important to review your 401(k) at least annually to make sure you’re on track. The following six tips will help guide you through the process.
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Saving and Investing in Your 30s…

Planning for the Long Road Ahead

We turn our attention to 30-somethings, and how making good choices today may help your financial well-being decades from now.
Here are the top 5 things you can do to plan ahead. While taking charge of your finances is not especially difficult, it does take time and attention. Consider working with a financial advisor to create a plan that takes into account your specfic circumstances and goals.

Pay down school loans – As of December 2106, Americans are awash in $1.31 trillion in education debt1 , and in 2016 the average student loan debt was $37,172. 2 The problem is that outstanding loan balances may cause you to delay other life decisions, such as buying a home or starting a business. There’s a straightforward approach to retiring school debt. Look at all forms of outstanding debt (student loans and credit-card debt) and assess whether you’re on track to paying it off in a desired time frame. You might also consider consolidating the debt or refinancing if it reduces the interest rate you pay each month or accelerates your repayment schedule.
Protect your loved ones – Even when you’re in the prime of life, misfortune may strike. If you are married, you may want to set up a living will and/or a revocable life insurance trust. A living will specifies what actions should be taken for your health if you are no longer capable of making decisions for yourself because of illness or incapacity. A revocable life insurance trust allows you to specify that life insurance benefits be paid into a trust for the benefit of your loved ones. This is often recommended for younger families with relatively modest assets but substantial insurance policies to pay down debts, fund education or accumulate wealth.
If you have dependents, consider buying term insurance – Term life insurance pays a fixed amount of benefit for a certain period of time (the relevant term). Parents with dependent children often purchase term life insurance policies as the least expensive way to provide for those children’s livelihoods in the event of their death.
Save for a down payment on a house – But only if you have no credit-card debt and you’ve set up a six- to eight-month emergency fund. The emergency fund needs to be an account that you can access relatively quickly, without penalty, such as a bank savings account or money market fund. Many financial advisors do not recommend purchasing a home with less than a 20% down payment.
Keep saving – A rule of thumb is to save about 15% of your salary for retirement, including IRAs, employer-sponsored plans and any matching employer contributions. While taking charge of your finances is not especially difficult, it does take time and attention. Consider working with a financial advisor to create a plan that takes into account your specific circumstances and goals.

 
 
 
1 Quarterly Report On Household Debt And Credit, New York Federal Reserve, February 2017 https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2016Q4.pdf
2 10 Student Loan Facts College Grads Need to Know, Farran Powell, U.S. News, May 9, 2016 https://www.usnews.com/education/best-colleges/paying-for-college/slideshows/10-student-loan-facts-college-grads-need-to-know
Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. © 2014 Kmotion, Inc Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

Procrastination Can Cost You!

Putting off retirement savings is a missed opportunity.

Most people start saving for retirement at 35 – fully 10 years beyond the ideal age, according to a recent Financial Engines survey.* Reasons to procrastinate are familiar to many; but delaying your savings can be costly…
Most people start saving for retirement at 35—fully 10 years beyond the ideal age, according to a recent Financial Engines survey.1   Reasons to procrastinate are familiar to many.
But delaying your savings can be costly, as the chart below shows. Let’s say Tom starts saving 6% of his $36,000 salary at age 25. With a reasonable rate of return and adding to his contributions each year, Tom could have close to $500,000 by age 65.
 

Jeanelle waits until 35 and will need to contribute twice as much—12% of her yearly salary—to achieve the same goal as Tom. Ernesto, who waits until 40, has a steeper hurdle: The amount of annual contribution required to build a $500,000 retirement nest egg rises to 16.5%.
Why does the investor have to make higher contributions the longer he or she waits? The simple reason is lost opportunity, in a few forms.

The loss of compounding – When your money earns a return, that return is added to your original investment and earns even more money. That’s compounding.
The loss of company-matching contributions – If your company matches your 401(k) or 403(b) contribution, it will add a certain percentage to your contribution each month. This is basically free money for you.
The loss of annual increases in contributions – If you are not increasing your contributions, you lose the potential for investment growth on those higher amounts.

Putting things off is human nature. But it’s never too early or late to start to save, and waiting until your late 30s or early 50s doesn’t cause irreversible damage to your ability to build a nest egg. It just means you may have to contribute more to your retirement account than you would have if you started earlier.
 
 
1 http://blog.financialengines.com/2015/04/14/the-cost-of-financial-procrastination/
Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. © 2015 Kmotion, Inc Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com