Review your Retirement Plan Options at Your Current Employer

 
Does your current employer offer a retirement plan? If they offer something above and beyond a 401(k), good for you!
Find out if this is a defined benefit or a defined contribution plan.
 
What’s the difference?
 
Defined benefit means you will get $X/month as a pension when you retire based on your salary and years of service. Pretty simple. They tell you the amount that you are getting.
 
Defined contribution plans mean that your employer will put in $X a year into a retirement plan on your behalf. It is usually a percentage of your salary. The difference is that they aren’t guaranteeing how much your will get at retirement. When you retire, the amount you get is based on how much they’ve added, and the performance of the account. You can choose to take a lump sum or an income stream as a pension when you retire.
 
 
Why do you need to know this? A couple of reasons… Frequently, when someone retires and they get a pension, they can elect to take a smaller pension amount and have the pension extend to their spouse after they pass away. This is great for financial planning purposes.
 
If you aren’t married and have a partner, many employers do not extend this benefit to the unmarried partner. Particularly if it’s a government agency, such as a school system, law enforcement, etc. This changes the financial planning landscape.  If you are unmarried and partnered, you might be better off to take the lump sum upon retirement instead of the pension. Or take the pension and get additional life insurance.
 
Either way, planning is a little tricky in these situations. So find out what you have and how it works.
 
Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com
 
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
 
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, a registered investment advisor and separate entity from LPL financial.
 
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org www.sipc.org
Posted in Florida Real Estate Mortgage Guy Blog | Leave a comment

5 Common Retirement Planning Mistakes

5 Common Retirement Planning Mistakes

There are five common retirement planning mistakes that many people make

Snip20150601_1

 

 

 

 

 

 

Train Wreck!!

Photocredit: Tom Brandt

  1. Changing investment strategies based on emotions.

It never feels good when the market goes down. And seeing your account value go down is never pleasant. The emotional side of you wants to stop the pain. In other words, pull your money out of the market. Then when the market goes up, you want to be a part of the party and put money in! Analyze what you are really doing when this happens. You are selling an investment low, then buying it back when it costs more money. Does that make sense? Would you sell your house when the price went down and then buy it back when the price went up because it was worth more? No. No you wouldn’t do that. So why do that with good investments?

  1. Not being honest about retirement costs

I see this all of the time. People want to retire so much that they choose to tighten the belt when they budget for retirement.  They hack things out of their life right and left on paper. Then they try to live it and find that the parameters are totally unreasonable. If you like to travel, then you like to travel. If you like to golf, then you like to golf. Don’t stop working too early just to be done, then punish yourself for the rest of your life. A few extra years of work may make the difference between having that annual vacation for the next 20 years or not. Think about that.

  1. Not starting to save early enough

Don’t be this person! By saving earlier in life, you don’t have to put as much away each year to reach your retirement goal! All due to the magic of compounding.

Starting at age 25, if you invested $3500 a year at an 8% return, you would have over $1,000,000 at the age of 65. That’s it! Only $3500 a year!

If you wait until age 45 to start saving, then you have to invest $20,000 a year for 20 years to get a million dollars. That’s quite a difference. Don’t ignore the power of compounding. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

  1. Not practicing good asset allocation

You need to spread the love in your portfolio, so to speak. Putting all of your investment dollars in one basket is never a good idea. This year’s hot performing asset class might be next years worse. Seek balance in all you do, including investing. Consider seeking the help of a financial professional for advice. Asset allocation does not ensure a profit or protect against a loss.

  1. Leaving your 401k behind

You got a new job. Yay for you! Don’t forget about that 401k that’s been sitting there. You took the time to invest in it. Take the time to explore your distribution options. You can be losing out on the opportunity to grow your nest egg if you ignore your money! A good retirement plan is like a garden. It needs to be tended to and watched over to thrive.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial, the largest independent broker/dealer* in the United States.  www.silverkeywealth.com *Financial Planning Magazine (June 1996-2013 based on total revenue)

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners, a registered investment advisor and separate entity from LPL financial.

Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org. www.sipc.org

Posted in Florida Real Estate Mortgage Guy Blog | Leave a comment

Did It Make Sense To Wait?

 

Did It Make Sense to Wait? | Keeping Current Matters

There are many people out there who debated purchasing a home over the course of the last year, but ultimately did not. Whatever their reasons were for delaying, let’s look at whether the decision to wait to buy made sense.

What happened in 2014?

The 30 year fixed rate on January 2, 2014 was 4.53% as reported by Freddie Mac. Looking at the chart below, your monthly mortgage payment with principal and interest for a $250,000 home would have been $1,271.17.

Even though interest rates have dropped below 4% and ended 2014 at 3.87%, home prices appreciated by 4.8 percent over the same time according to the Home Price Expectation Survey.

So that same home appreciated by $12,000 and now costs $262,000. The most recent report by Freddie Mac reports the average 30-year fixed rate is currently 3.73%.

Did It Make Sense to Wait? | Keeping Current Matters

Many may say, “See waiting a year made total sense, I’m saving $60 a month.” And they’d be right, over the course of the year they saved $729.36.

But what they haven’t realized, is that as the price of the home they purchased went up by $12,000, even if they just put a down payment of 5%, they had to come up with an additional $600 at the start of the process. So really they’ve only saved $129.36 in a year.

Is a savings of $11 a month really worth holding off on pursuing a home to call your own after you weigh all the benefits that come along with that?

  • Building equity you can borrow against in the future
  • Having a safe, comfortable environment that fits your family’s needs
  • Having control over your space
  • Tax benefits
  • And so many more…

Bottom Line

The experts are predicting that homes will appreciate by another 4% and interest rates will increase by a full percentage point by the end of 2015. If you are in a position to be able to buy a home now before these predictions become reality, contact a local real estate professional and start the process.

Posted in Florida Real Estate Mortgage Guy Blog | Leave a comment

The 4 Boring Secrets to Accumulating Wealth

This gallery contains 1 photo.

The secret is that it’s all really common sense in your approach. Start saving when you are young. We all know this can be tough. Young adults often have student loan debt, want to buy their first home, and retirement … Continue reading

More Galleries | Leave a comment

4 Main Points on how to choose a Financial Advisor

This gallery contains 1 photo.

Credit: Dennis Jarvis Choosing a financial advisor can be a daunting proposition. Today, we’ll tackle some of the biggest questions and points that one should take into account during your search! What kind of licensing does the advisor have? A … Continue reading

More Galleries | Leave a comment

What is a Leading Economic Indicator and Why is it Important?

This gallery contains 1 photo.

Often, investing terms can make you feel like you are lost in a maze of strange vocabulary. Today I thought I’d tackle one that people talk about on the news frequently. Leading Economic Indicators A leading economic indicator is a … Continue reading

More Galleries | Leave a comment

USDA Loans

USDA Loans The USDA changed rules in 2009 that makes millions of Americans eligible for its rural mortgage programs. The American dream of home ownership has become more difficult as families struggle to come up with the 20% down payment that many conventional … Continue reading

More Galleries | Leave a comment

FHA Loans

FHA Loans FHA loans have been helping people become homeowners since 1934. Some benefits of FHA loans are: Low down payments Low closing costs Easy credit qualifying What does FHA have for you? Buying your first home?FHA might be just what you need. Your down payment can be … Continue reading

More Galleries | Leave a comment

What every working person needs to know about their 401k and in-service distributions

This gallery contains 1 photo.

          Credit: wsilver This post is so important I felt the need to use a cute puppy photo to entice you to click on it. Seriously, I have no shame. None at all. You really need … Continue reading

More Galleries | Leave a comment

Ten Practical Steps You Can Take to Control Your Divorce Fees and Costs

This gallery contains 1 photo.

Ten Practical Steps You Can Take to Control Your Divorce Fees and Costs Guest Post by Sonya F. Johnson CPA/ABV, CFF As a financial expert, I have seen fees and costs spiral out of hand in the majority of divorce … Continue reading

More Galleries | Leave a comment

The Most Affordable Mortgage In Today’s Economy

This gallery contains 1 photo.

        Just recently I heard FHA proposed another fee increase. Last year FHA increased their mortgage insurance premiums. On the 30 year mortgage product the mortgage insurance is now for 30 years unless you refinance out or sell … Continue reading

More Galleries | Leave a comment

3 Key Points for Determining Life Insurance Needs

This gallery contains 1 photo.

  Life insurance is not a fun topic.  It means that someone has kicked the bucket or you are planning on someone kicking the bucket. Usually people don’t like to dwell on if they have enough insurance.  But let’s be … Continue reading

More Galleries | Leave a comment