Dividends Aren’t Enough

April 18, 2011

Dividends are a beautiful thing.  Last week I wrote about my mother-in-law’s bond fund that paid her a steady stream of dividends over the years – twenty five years to be exact.  Every month, the dividend came like clockwork and she spent it.  Now she is using the funds to pay for her care – she is 97.  This strategy worked for her because she has other funds invested in other types of vehicles.  Here is the problem with using the dividend strategy as the only strategy—even if the dividend doesn’t increase, the cost of goods and services do.  So the dollar buys less and less each year. Continue reading “Dividends Aren’t Enough”

Last Minute Tax Tips for Last Minute Filers

April 13, 2011

In case you haven’t heard, the 2010 tax filing day has been extended until Monday, April 18, 2011.  That means taxpayers get one extra weekend to find as many credits and deductions as they can before sending their returns off to the IRS.  Now it’s not often that waiting until the last minute pays off, but consider these tax tips a reward for your procrastination: Continue reading “Last Minute Tax Tips for Last Minute Filers”

How Can My Avatar Help My Retirement?

April 07, 2011

I love delving into different financial articles because, if nothing else, it provides me with new educational tools I can utilize in workshops and one-on-one conversations.  But the other thing it provides me is entertainment.  It is rare that an article can feed both.  I was lucky enough to find one that really grabbed me. Continue reading “How Can My Avatar Help My Retirement?”

Retirement Preparedness: Don’t Work Until You are 70

April 04, 2011

I read an article today titled, How to Collect Social Security and Still Keep Working?,  and found myself yelling at the computer screen in a rant similar to what I have seen my husband perform during sporting events when his team is losing.  It is out of character for me but this article got me going.  The article gives details of how much you can earn at 62 and still collect your social security and goes on to explain how income from working affects your income after you hit your full social security age (for me that is 67)  but the whole premise to me is backwards.  We CAN collect Social Security and still keep working if we time it correctly and we don’t make too much money if we are under our “full” retirement age.  But seriously, do we really want to? Continue reading “Retirement Preparedness: Don’t Work Until You are 70”

Happy Birthday to Me and to the 401(k)

March 22, 2011

The 401(k) is celebrating its 30th birthday this year – I wish I could say the same for my birthday next week!  I wasn’t quite old enough to be in the workforce back in 1981 (I was in junior high) when the first 401(k) was conceived by Ted Benna, a fellow Pennsylvanian like myself.  As I age I’ve gained wrinkles, a few grey hairs, and a few extra pounds.  As the 401(k) has matured, we’ve seen the growth of auto enrollment, auto escalation, target funds, and even the Roth option.

So why are some employees still not taking advantage of the 401(k) opportunity?  I hear excuses ranging from “I can’t afford to contribute,” “I don’t have faith in the stock market,” to “I plan to eventually after I’m sure I will be staying at my job.”  These are employees that could have been getting matching money over the years but just don’t realize how much that means to their bottom line.  I have actually spoken to a few employees who thought they WERE contributing, but they were NOT!  Try this trick that a client of ours used a few years ago as an eye-opener: Mail a dummy 401(k) statement with a zero balance to all your employees that are not actively participating in your plan.  I guarantee you will get at least a few calls from those workers that thought they were contributing and they are calling wondering why they don’t have any money in their account!

Benefits Communications: Understanding Retiree Medical and Medicare Coverage

March 15, 2011

Over the past few weeks, I’ve been on a roadshow of workshops across the country, talking to groups of pre-retirees about health insurance coverage in retirement.  These particular employees are very fortunate, since their company sponsors a group retiree medical plan, and actually still subsidizes a majority of the cost.

Even so, many of these employees still experienced sticker shock when they found out the cost of the medical coverage and had not even considered the impact on their retirement income.  We also spent some time reviewing how much Medicare will cost, what it covers, and how their retiree health plan will coordinate with Medicare once they reach age 65. Continue reading “Benefits Communications: Understanding Retiree Medical and Medicare Coverage”

Retirement Preparedness: A Wake-Up Call for Generation X Investors

March 11, 2011

Talking with a group of pre-retirees, one of the people in the room (a born entertainer) used Styrofoam coffee cups as visual aids to illustrate his point.  We were talking about incomes and expenses during retirement, and he broke out into a comedy routine/illustration of his financial life.  He filled a big pitcher with water and filled the first cup, broke out a Sharpie and labeled it “Pension.”  He had been an employee of the phone company for 40 years and has a very solid pension income.  The next cup he labeled “Social Security” and he filled that cup about ¾ full.  The 3rd cup he put a few drops of water into and labeled it “Investments.”  He said the 401(k) plan arrived a little too late in his career and he had not participated until the last several years of his career, plus he had a number of children that all went to college which left his personal savings and investment balances rather low. Continue reading “Retirement Preparedness: A Wake-Up Call for Generation X Investors”

Should I Pay Down My Debt or Save More for the Future?

March 10, 2011

There are questions in life where sometimes the best answer is “it depends” (how many times did we hear that when we were growing up?).  This is one of those questions, but I do have some solid guidelines that can help you make a decision on this question.

First, take a hard look at the interest rates you’re currently paying on your debt as well as what you are getting on your savings accounts.  In most cases Continue reading “Should I Pay Down My Debt or Save More for the Future?”

Early Retirement Buyouts: A Good Idea for Who?

March 08, 2011

A school district in Minnesota recently announced an early retirement incentive program to entice their most senior (and highly paid) teachers to retire in order to replace them with less experienced teachers with lower salaries.  The program has an interesting twist – if at least 10 teachers take the buyout, each will receive $15,000 but if at least 15 accept, then they will each receive $20,000.  I can imagine a bit of peer pressure will be felt by those teachers who are on the fence about taking the bait.

How do I know these details?  One of the teachers eligible for this early retirement incentive attended a workshop I was facilitating at her husband’s place of employment, where I happened to be discussing details on Retiree Medical and Medicare coverage (which happens to be next week’s subject I’ll cover). Continue reading “Early Retirement Buyouts: A Good Idea for Who?”

Financial Lessons from a Group of Retirees

March 04, 2011

I have had the opportunity lately to talk with a number of people who have been retired for at least a decade.  I asked them to take a look back at their financial lives to see if there were any lessons they had learned that today’s workforce could learn from.  All of these people were comfortable financially and had successful careers in their chosen fields.  I did not expect to hear so many comments about what they would do differently if they had the opportunity to turn back time.  They had some advice for their grandchildren’s generation, and here are just a few of their observations and recommendations: Continue reading “Financial Lessons from a Group of Retirees”

Are You Saving Too Much?

March 02, 2011

When was the last time someone asked you if you thought they were saving too much?  Someone recently asked me this question and at first I was taken aback.  How is it that anyone could have money to save, let alone enough to wonder if they were saving too much?  Didn’t we just go through a recession?  Aren’t we all just swimming in debt, living paycheck to paycheck, desperately trying to make ends meet? Continue reading “Are You Saving Too Much?”

Retirement Preparedness: Save Forty Years then Spend Forty

February 28, 2011

Think about it.  We work for forty years of our lives starting from our early twenties to sometime in our sixties.  Then we have to support ourselves for the rest of our lives.  In other words, save for forty then spend for twenty, thirty or even forty years depending how your cards are dealt.

In my case, the longevity hand I was dealt isn’t the strongest.  Continue reading “Retirement Preparedness: Save Forty Years then Spend Forty”

Where Do Your Employees Stand Regarding Retirement Preparedness?

February 22, 2011

Employees are grossly unprepared for retirement, and employers are growing increasingly concerned about the cost of delayed retirement, which is estimated to be $10,000-$50,000 per year for every year an employee  postpones retirement.   The implications of this problem are huge, making it the second most pressing issue HR departments are facing, after health care. Continue reading “Where Do Your Employees Stand Regarding Retirement Preparedness?”

Retirement Preparedness: Move Toward Retirement Not “Away” from Working

February 21, 2011

Retirement is not simply ceasing to work but rather a step toward something – a whole new phase in life.  Many people don’t realize that until it is too late.  A friend of mine was discussing this with me over the weekend.  He works for a utility company in upstate New York as a project manager.  He was exclaiming that these guys who recently retired are coming back to work for him as part-time retirees. Continue reading “Retirement Preparedness: Move Toward Retirement Not “Away” from Working”

What and When to Buy – How We Decided to Purchase Our Rental Property

February 17, 2011

The past couple weeks have been a flashback in time for me as I have been providing some basic general principles regarding the purchase of investment property.  What I’d like to do this week is to tell you a story about a certain financial professional and his wonderful wife and the lovely discussions they had before they pulled the trigger and bought an investment property.

It was a pleasant time back in those days, two newly married professionals having dinner conversations surrounding things like vacations, the day’s work, retirement, etc. Continue reading “What and When to Buy – How We Decided to Purchase Our Rental Property”

The Impact of Being an HCE

February 15, 2011

Some of your employees may have recently received a letter in the mail notifying them that they are considered an HCE – highly compensated employee.  The good news is that being an HCE means a nice paycheck, since the employee would have made at least $110,000 in 2010.  The bad news is that because of their HCE status, their ability to contribute to the company 401(k) may be limited.  Continue reading “The Impact of Being an HCE”

Retirement Preparedness: What Employees Need to Know About Investing

February 07, 2011

There is information that is nice to know and information that you need to know but what you really need to know is — the difference.  For example, my husband is a history buff with an avid interest in politics.  When we have friends over and we are discussing politics or world affairs, he often pops up with not just the year a politician won a race but who ran against him.  I am always amazed at his memory and wonder, “How does he remember that?”   It’s crazy!  Even though I am always impressed, I do know that is the kind of information that is nice to know but in our work and in our lives, this is not vital information that we need to know. Continue reading “Retirement Preparedness: What Employees Need to Know About Investing”

Investing: The Benefits of Starting Young

January 14, 2011

Over the past few weeks I have had the opportunity to meet with a number of people who are recent college graduates just starting their careers.  Boy, has the world changed a little bit since I graduated!  The first thing I noticed is that starting salaries today are what managers’ salaries were when I was starting my career.  And, as my kids would tell you, back when I graduated from college I still had to feed my pet dinosaur on my way to work.  Is it wrong to occasionally want to sell your kids on EBay?   Back to the point. Continue reading “Investing: The Benefits of Starting Young”

Trends in Employee Benefits: In Plan Roth Rollovers

January 11, 2011

As if the Roth vs. pre-tax 401(k) contribution decision isn’t enough already to cause confusion for employees, now the IRS has allowed employers to offer in-plan Roth rollovers for eligible rollover distributions.  As part of the Small Business Jobs Act of 2010, employees can take advantage of this opportunity for distributions made after September 27, 2010 if their employer adds the in-plan Roth rollover option through a plan amendment.  Plan sponsors of a 401(k) or 403(b) were able to add the feature in late 2010, and a 457 government plan may adopt an amendment to include a designated Roth account for in-plan Roth rollovers after December 31, 2010. Continue reading “Trends in Employee Benefits: In Plan Roth Rollovers”

Financial Education in the Workplace: What a Difference a Few Years Make

January 04, 2011

I recently spent a few cold, snowy days meeting with employees in the Midwest counseling each of them regarding their retirement goals.  I was surprised to hear quite a few employees were planning on early retirement, especially since we hear the trend is just the opposite because of our current economy.  Continue reading “Financial Education in the Workplace: What a Difference a Few Years Make”