How to Plan for an Extreme Early Retirement

February 02, 2012

My most popular blog post (and the most popular one on our whole blog) called “How to Be Financially Independent in 5 Years (No Matter What Age You Are)” was about a concept called “Early Retirement Extreme” in which people save very large percentages of their income to be financially independent before they even turn 40. For example, if you save 75% of your take-home pay and earn a 5% real rate of return, you would have enough savings in just 5 years to maintain that standard of living for the rest of your life (assuming a standard 4% safe withdrawal rate of your initial savings amount and adjusted each year for inflation). While this would probably not be realistic for most people, the more you can save, the sooner you can be financially independent to use your time as you see fit. (The author of the blog that inspired my post actually ended up going back to work but out of enjoyment rather than financial necessity.) But in addition to the challenge of living on much less income than we’re used to, there are some other considerations facing anyone looking to retire extremely early: Continue reading “How to Plan for an Extreme Early Retirement”

Important Changes to be Aware of in the New Year

January 04, 2012

As a financial planner at Financial Finesse, one of my responsibilities is to make sure our content library is up to date when things change.  Now that I’ve had a chance to review all of the changes that will take place in 2012, I thought it would be helpful to list what I consider some of the more relevant ones, and what you should do to take advantage of them. Continue reading “Important Changes to be Aware of in the New Year”

How You Unknowingly Sabotage Your Finances

December 19, 2011

My husband and I are simplifying our lives – we went from a 5 bedroom 3 bath house to a two bedroom condo.  We gave our kids the extra furniture and other possessions we don’t need, and what they didn’t want went to charity.  Instead of keeping china and crystal in a hutch (or in the closet) to sit and gather dust, except for twice a year for a holiday celebration, we are using it every day now.  Otherwise, it will be passed on to our children who might not ever use it either!  Life is slower and our pot roast and potatoes are displayed much more elegantly. Continue reading “How You Unknowingly Sabotage Your Finances”

The Little Financial Engine That Could (But Only If You Use It)

November 17, 2011

I’ll let you in on a little secret from my days as a financial adviser. When you sit down with an adviser, they treat you really well, laugh at all your jokes (even if they’re not very funny), and ask you some questions about your current financial situation and goals for the future. Then they put all that information into a software program that calculates some projections, and may even make some recommendations. Guess what they do with that information? They charge you a fee for it or use it to sell you something. Continue reading “The Little Financial Engine That Could (But Only If You Use It)”

Working Past 70 and a Half

November 16, 2011

If you have ever sat through a retirement planning workshop then you probably know that 401(k) plans and traditional IRAs are subject to required minimum distributions (RMDs) starting in the year you turn 70 ½, but what you might not realize is that RMDs from 401(k) plans are NOT required as long as you continue to work.  Recently I received an email from a webcast participant who wanted to know when he would be required to take a distribution from his 401(k) plan, and how the distribution would be calculated. Continue reading “Working Past 70 and a Half”

The Truth About Target Date Funds

November 11, 2011

I read this article on Bankrate.com about investors’ belief that target date funds come with a guarantee of a sufficient retirement income. The statistics are a little bit startling (51 percent — of people investing their retirement savings in target-date funds see them as a retirement planning panacea and think that putting their money in them guarantees their retirement income needs will be met), frightening even, from the perspective of a financial planner. The conclusion of the article is: Continue reading “The Truth About Target Date Funds”

The Biggest Myths About Social Security

November 10, 2011

In talking to people all over the country about their retirement, there are two big myths I’ve noticed when it comes to Social Security. The first one (which I hear less and less) is that there’s an account set up somewhere for you that you’ve been contributing to with your tax dollars. Unfortunately, Social Security doesn’t work that way. Instead, your tax dollars are immediately paid out to current beneficiaries with the expectation that future taxpayers will pay for your benefits when you retire. Continue reading “The Biggest Myths About Social Security”

Karaoke & My Grandparents’ Simple Success Formula

October 21, 2011

Last night, after going out to dinner with my girlfriend, I did something I thought I’d never, not in a million years, ever do.  I got up in front of an audience and sang at a Karaoke Night!  This may not be noteworthy for many people, but for me it is.  You see, when I sing most of the dogs in the neighborhood start to howl, glass starts to shatter, and anyone within earshot either starts to bleed from the eardrums or shouts, “Stop, PLEASE!!!!!”  I’ll never be confused with the next American Idol.  But, I got up and did my best to make everyone else look exceptionally talented.  But, that’s not the point. Continue reading “Karaoke & My Grandparents’ Simple Success Formula”

When in Doubt, Balance it Out

October 05, 2011

As more and more of the onus of saving for retirement falls on employees, more and more employers will look for ways to enhance their retirement savings plans.  One of the emerging plan features that many employers are adopting is the addition of a Roth option in their 401(k) plan.  If and when an employer adds this option, it seems inevitable that employees will immediately ask “which option should I use?”  To help shed some light on this basic question, here are some things to consider: Continue reading “When in Doubt, Balance it Out”

One of My Favorite “New” Features of 401(k) Plans

September 16, 2011

I would love to write about my favorite flavor of ice cream (Ben & Jerry’s Karmel Sutra) or other favorite foods (too many to list, which is why it would be fun to write about it), but I’m having trouble finding a way to make a connection into the financial world.  I just got done watching the Food Network’s “Best Thing I Ever Ate,” so forgive me for the food references.  While watching that, I happened to be reading an article in a financial journal at the same time (is that multi-tasking or A.D.D.?) about features that are available today in 401(k) plans that weren’t widely available 10 years ago.  They listed things like auto-enrollment and a cap on the percentage of company stock allowed in the plan, as well as a few others.  The one that really stood out to me as something that, if I could wave a magic wand and get everyone to enroll in I’d do it in a second, is the automatic rebalancing feature.  Why do I like this feature so much?  Well, I’ve seen it work as a means of managing your investment risk.  I’ll use an example to illustrate my point.  Continue reading “One of My Favorite “New” Features of 401(k) Plans”

Things to Consider if You Were Offered an Early Retirement Incentive Package

September 09, 2011

Last week I talked about some of the biggest factors that people face when considering an early retirement package.  Health insurance issues and determining when to take Social Security were by far the 2 most common topics of conversation.  But, they were by no means the only topics of conversation. Continue reading “Things to Consider if You Were Offered an Early Retirement Incentive Package”

Things to Consider if You Were Offered an Early Retirement Incentive Package

September 02, 2011

Over the last month, most of my working hours have been spent talking to people about the reality of deciding, in a short time window, if they are going to retire in the next several months.  Why?  These people have all been offered an early retirement incentive package with a deadline for accepting or rejecting the offer.  This meant that, for them, retirement was no longer something that was “out there in the future.”  It became a “right here, right now” opportunity.  There were things I learned during that process, and over the next 2 weeks I’ll talk about the “universal” factors.  Each person had their own story, their own situation, and their own set of circumstances that was remarkably different than anyone else’s.  But, there were some factors that were important to every single person I met.  They all asked about several factors that would impact the rest of their lives.  Here are the first few factors (more to come next week): Continue reading “Things to Consider if You Were Offered an Early Retirement Incentive Package”