If we know that on average our money is losing a value of between 2-3% yearly, then we know that in 20 years from now our money will have lost about half of its value. Or simply put, in 20 years our cost of living will double. That means if you make $50,000 per year now, you’ll need to be making around $100,000 in 2041 to maintain the same standard of living you have today. So what is your plan in retirement to double your income in 20 years?
In the Book of Genesis, God gives Adam and Eve authority over the earth, forbidding them of only one thing. They are forbidden from tasting the fruit of the knowledge of good and evil. And for a few moments, their innocence is perfect. Then it happens. They taste the fruit and commit the original transgression. And after that, everything bad and wrong with earthly life suddenly enters the world: sin, shame, struggle, sickness and death. They only made one little mistake, but it was the only mistake they couldn't afford to make.
Our strategy is long term and not affected by day-to-day fluctuations of the stock market. Our retirement plans are designed with one thing in mind and that is to keep you as worry free as possible so you can enjoy this time in your life that you have earned and deserve.
It's March 2023 and we're smack dab in the middle of a Bear Market. What should you do with your investments? Should you do anything? Do you have time for them to recover? Let's talk about that for a minute..
The impulse to get out of the market before something bad happens is an impulse in all of us but it's at best only half of a strategy. What impulse would you listen to for re-entry to the market? Impulses don't make a strategy, but they can totally destroy a strategy.
As I write this blog in February 2023, the last 14 months have given us a master class on how inflation can affect retirement planning and your purchasing power in general. Probably the biggest misconception I see when talking to retirees or soon to be retirees is that they worry about losing their "money" in retirement but they don't worry about losing their purchasing power.
With the Russian invasion of Ukraine, we’ve seen first hand how world events can affect the markets here in the United States. We’ve seen lots of market volatility since the beginning of the year. But guess what? The market is always volatile. And the reason for that is many investors make all their decisions based on emotion. And by doing this they blur the lines between volatility and risk. Risk and volatility are not the same thing. In fact, they aren’t even remotely related.
One of the most underused, overlooked and unappreciated practices in investing is rebalancing your portfolio on a yearly basis. There's an old saying that there is no such thing as a free lunch. Disciplined rebalancing, however, is as close as you can get to a free lunch. Let's explore why.
It's January 23, 2023 and all the media pundits are trying to predict a recession as if they have any idea about anything at all. In my opinion, and by definition, the American economy was and is already in a mild recession. Let's define what a recession is and what the Gross Domestic Product is and what this means to you. Then we will talk about tips to help you through a recession. And before we start, I urge you not to panic. Recessions are common and often they are exactly what can cure a struggling economy. They are NOT to be feared!
If you'll recall, the original Secure Act was passed at the end of 2019. It raised the Retired Minimum Distributions (RMD) age to 72, limited Stretch IRAs to just 10 years, allowed you to pay off $10,000 of your student loans with a 529 plan, and mostly encouraged employers to provide better 401(k)s. Secure Act 2.0 provides additional changes, almost all of which are great for savers, investors, employees, and employers. Let's go over them.
Since 1948, there have been 10 Bear markets U.S. excluding the one we are in right now. The average number of years from the peak of the Bear market to the recovery, meaning the time it took for the S&P 500 to climb back to its previous highs was 3.9 years and the median/midpoint was 2.7 years. On five of those occasions, the market recovered in 2 years or less! In other words, market downturns feel much longer than they actually are.
Being "in" a certain tax bracket doesn't mean you pay that federal income tax rate on everything you make. The progressive tax system means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.
If Congress passes this massive year end spending bill, sometimes referred to as the Omnibus, it could have potential changes to Retirement Plan rules. I'll quickly run through the potential changes on this blog.
In a society that has basically turned outperformance into a religion, the average investor is not only underperforming the markets, he is consistently underperforming his own investments!
Typically, you pay an advisor the same reason you pay a mechanic to repair your car. If you wanted to repair it yourself, you probably could, but what's your time worth? Is that really what you want to do? Can you do it right? What is your strategy for doubling your income in retirement? What is your strategy for tax planning in retirement? What is your strategy for claiming Social Security in retirement? If you aren't sure of those answers, it would be wise to sit down and talk to an advisor about your retirement planning needs.
You may be considering retirement from your cooperative this year. Most cooperatives that participate in the NRECA plan provide you with an annuity option, lump sum option or some variation of both options via your R&S pension plan. If you are not familiar with annuities and their payment options the choices can be a bit confusing. I'm going to list the options with plain definitions that are easy to understand in hopes that it can help you make an informed decision.
