When most of us think of investing, we immediately think of investing for retirement. While your financial plan should include investing for retirement, there are other pieces of the puzzle to consider. Establishing a budget, investing early and regularly, starting an estate plan, and saving for college should also be included in a complete financial plan.
Establish a budget
Establishing a budget is a great first step for a sound financial plan. A budget is a planning tool used to record all of your income and expenses. By writing down how much money you earn and spend each month, you can see where your money is going and prioritize your expenses and needs. Any money left over can be used for saving and investing. Even a small amount of money invested regularly can help.
Invest early and regularly, even small amounts
The best reason to start a regular investment program early is to give the money you set aside as much time as possible to grow through compounding. If you haven't started investing yet, it's best to start now and get in the habit. Just remember that the amounts you invest do not have to be large, especially if the money is taken directly out of each paycheck. You will be surprised how you don't miss money you don't see. If you're already investing every month, look for ways to contribute more through bonuses and monetary gifts.
Estate planning
Estate planning is a strategic plan that coordinates the distribution of everything you own before and after you die. You may think you don't have enough money to worry about an estate plan, but such a plan plays a critical role in everyone's financial plan.
A will is a good start, but by no means is it a complete plan. A will can help ensure that assets -- your home, property, savings, and investments -- are passed on according to your wishes. If you die without a will, your state law decides the distribution of your estate. Proper estate planning also may include powers of attorney, trusts and living wills, which may address certain needs while you're still alive.
College tuition planning
Preparing for your children's or grandchildren's college education is important, especially when tuition costs are rising every year. Your plan might include investing in the Coverdell Education Savings Account, which allows tax-free withdrawals for qualified higher education expenses such as room, board and tuition. You might also want to look into prepaid tuition plans or a College Savings Plan (529 Plan).
When developing a financial plan, consider all the pieces to the puzzle, not just retirement and you may be prepared to meet all the expenses in your financial notebook.
For more information go to www.bobbyromander.com
Friday, August 15, 2008
Thursday, August 14, 2008
Seven Savings Strategies
Seven Savings Strategies that work.
1. Don't splurge with your tax refund. Save it, or use it to pay down debt instead.
2. Take full advantage of your employer's retirement contributions. If your employer offers a free match to your contributions, this is free money! It's a good idea to take it.
3. Start small and stay steady. Start as young as you can, with whatever you can, even if you are simply setting aside pocket change.
4. Pay yourself first. Choose the important over the urgent. Automatically deposit funds into your savings account right from your paycheck, before you can touch it.
5. Create separate savings funds for the milestones in your life. These include not only retirement and education, but also weddings, buying a home and more.
6. If you have children, find the right education plan. There are lots of different college savings plans. These may vary according to which state you live in. Compare plans and determine what makes the most sense for you and for your situation.
7. Most important of all...Work with someone you know and trust. Successful savings plans can't be mass-produced, and they can't be put on autopilot. Financial issues are complicated and risky -- It pays to work with a professional who knows what they're talking about, and who also knows you and will stay with you over the long haul and through the ups and downs of your household.
For more information visit www.bobbyromander.com
1. Don't splurge with your tax refund. Save it, or use it to pay down debt instead.
2. Take full advantage of your employer's retirement contributions. If your employer offers a free match to your contributions, this is free money! It's a good idea to take it.
3. Start small and stay steady. Start as young as you can, with whatever you can, even if you are simply setting aside pocket change.
4. Pay yourself first. Choose the important over the urgent. Automatically deposit funds into your savings account right from your paycheck, before you can touch it.
5. Create separate savings funds for the milestones in your life. These include not only retirement and education, but also weddings, buying a home and more.
6. If you have children, find the right education plan. There are lots of different college savings plans. These may vary according to which state you live in. Compare plans and determine what makes the most sense for you and for your situation.
7. Most important of all...Work with someone you know and trust. Successful savings plans can't be mass-produced, and they can't be put on autopilot. Financial issues are complicated and risky -- It pays to work with a professional who knows what they're talking about, and who also knows you and will stay with you over the long haul and through the ups and downs of your household.
For more information visit www.bobbyromander.com
Wednesday, August 13, 2008
Taxes, All that you need to know
View our complimentary Federal Tax Guides for 2007 (PDF 81 KB) and 2008 (PDF 85 KB) .
Tax relief: HEART Act of 2008
On June 18, 2008, President Bush signed into law the "Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008." This legislation contains many types of tax relief for military personnel, and specifically offers tax-related benefits associated with employer-sponsored retirement plans, IRAs and Coverdell Education Savings Accounts (ESAs). Read a general overview for selected tax provisions of this legislation.
Pension Protection Act of 2006
On August 17, 2006, President Bush signed into law the Pension Protection Act of 2006 (PPA). This legislation includes a variety of provisions that protect savers and encourage retirement savings in IRAs and defined contribution plans. It also made permanent many retirement savings provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The information presented here is intended to provide a general overview of selected tax provisions of this legislation. For assistance in determining how these provisions apply to your personal financial situation, please consult a tax advisor.
Defined Contribution Plans and IRAs
Qualified Reservist Distributions – Qualifying military reservists called to active duty (after 9/11/2001 and before 12/31/2007) can take distributions from an IRA or certain other retirement plans free from the 10% tax penalty and re-contribute those amounts to an IRA during the two years after active duty ends.
Saver’s Credit Permanence – The Saver’s Credit provides a credit (up to $1,000) to eligible taxpayers for contributions to IRAs and certain qualified retirement plans (QRPs). Established by EGTRRA, the credit was scheduled to expire after the 2006 tax year. The PPA makes the Saver’s credit permanent and indexes for inflation the income limits applicable to the credit.
IRAs
EGTRRA Permanence – EGTRRA increased IRA contribution limits, allowed individuals 50 and older to make catch-up contributions and expanded rollover opportunities. These provisions were scheduled to expire on December 31, 2010 but are made permanent by the PPA.
Indexed Income Limits – Modified adjusted gross income (MAGI) limits relating to Traditional IRA contribution deductibility and to Roth IRA contribution eligibility will be adjusted for cost of living in $1,000 increments.
Charitable Distributions – During 2006 and 2007, Traditional and Roth IRA participants age 70½ and older may have IRA distributions paid directly to qualified charities and exclude those distributions (up to $100,000 per year) from their income.
Defined Contribution Plans
EGTRRA Permanence – The PPA makes permanent the EGTRRA contribution and catch-up limits and portability provisions. The Roth contribution option for 401(k) and 403(b) plans was also made permanent.
Beneficiary Hardship Distributions – Participants may take hardship distributions (if allowed by their plans) for specific unforeseeable emergencies of their beneficiaries, even if the beneficiary is not a spouse or dependent.
Rollovers to IRAs – Beginning in 2007, non-spouse beneficiaries of QRPs, governmental 457(b) plans, and tax-sheltered annuity plans may directly transfer death benefits to an inherited IRA. Also, beginning in 2008, direct rollovers may be made to Roth IRAs from QRPs, governmental 457(b) plans, and tax-sheltered annuity plans. Roth IRA conversion eligibility rules will apply to these rollovers.
Periodic Benefit Statements – Plans are required to provide quarterly benefit statements to participants in plans that allow participant-directed investments and annually to participants in plans that do not allow participant-directed investments.
Simplified Form 5500 Filing – The threshold for filing Form 5500-EZ has been raised to $250,000. Simplified Form 5500 reporting will be available for plans with fewer than 25 participants. Both provisions are effective for plan years beginning 1/1/2007 or after.
Automatic Enrollment – Various incentives are provided for employers sponsoring 401(k), 403(b) and governmental 457(b) plans to include automatic enrollment features in their plans. The PPA preempts state laws prohibiting automatic enrollment. It also creates a new safe harbor 401(k) plan with automatic enrollment features beginning in 2008.
For more information visit http://www.bobby.romander.com/
Tax relief: HEART Act of 2008
On June 18, 2008, President Bush signed into law the "Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008." This legislation contains many types of tax relief for military personnel, and specifically offers tax-related benefits associated with employer-sponsored retirement plans, IRAs and Coverdell Education Savings Accounts (ESAs). Read a general overview for selected tax provisions of this legislation.
Pension Protection Act of 2006
On August 17, 2006, President Bush signed into law the Pension Protection Act of 2006 (PPA). This legislation includes a variety of provisions that protect savers and encourage retirement savings in IRAs and defined contribution plans. It also made permanent many retirement savings provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The information presented here is intended to provide a general overview of selected tax provisions of this legislation. For assistance in determining how these provisions apply to your personal financial situation, please consult a tax advisor.
Defined Contribution Plans and IRAs
Qualified Reservist Distributions – Qualifying military reservists called to active duty (after 9/11/2001 and before 12/31/2007) can take distributions from an IRA or certain other retirement plans free from the 10% tax penalty and re-contribute those amounts to an IRA during the two years after active duty ends.
Saver’s Credit Permanence – The Saver’s Credit provides a credit (up to $1,000) to eligible taxpayers for contributions to IRAs and certain qualified retirement plans (QRPs). Established by EGTRRA, the credit was scheduled to expire after the 2006 tax year. The PPA makes the Saver’s credit permanent and indexes for inflation the income limits applicable to the credit.
IRAs
EGTRRA Permanence – EGTRRA increased IRA contribution limits, allowed individuals 50 and older to make catch-up contributions and expanded rollover opportunities. These provisions were scheduled to expire on December 31, 2010 but are made permanent by the PPA.
Indexed Income Limits – Modified adjusted gross income (MAGI) limits relating to Traditional IRA contribution deductibility and to Roth IRA contribution eligibility will be adjusted for cost of living in $1,000 increments.
Charitable Distributions – During 2006 and 2007, Traditional and Roth IRA participants age 70½ and older may have IRA distributions paid directly to qualified charities and exclude those distributions (up to $100,000 per year) from their income.
Defined Contribution Plans
EGTRRA Permanence – The PPA makes permanent the EGTRRA contribution and catch-up limits and portability provisions. The Roth contribution option for 401(k) and 403(b) plans was also made permanent.
Beneficiary Hardship Distributions – Participants may take hardship distributions (if allowed by their plans) for specific unforeseeable emergencies of their beneficiaries, even if the beneficiary is not a spouse or dependent.
Rollovers to IRAs – Beginning in 2007, non-spouse beneficiaries of QRPs, governmental 457(b) plans, and tax-sheltered annuity plans may directly transfer death benefits to an inherited IRA. Also, beginning in 2008, direct rollovers may be made to Roth IRAs from QRPs, governmental 457(b) plans, and tax-sheltered annuity plans. Roth IRA conversion eligibility rules will apply to these rollovers.
Periodic Benefit Statements – Plans are required to provide quarterly benefit statements to participants in plans that allow participant-directed investments and annually to participants in plans that do not allow participant-directed investments.
Simplified Form 5500 Filing – The threshold for filing Form 5500-EZ has been raised to $250,000. Simplified Form 5500 reporting will be available for plans with fewer than 25 participants. Both provisions are effective for plan years beginning 1/1/2007 or after.
Automatic Enrollment – Various incentives are provided for employers sponsoring 401(k), 403(b) and governmental 457(b) plans to include automatic enrollment features in their plans. The PPA preempts state laws prohibiting automatic enrollment. It also creates a new safe harbor 401(k) plan with automatic enrollment features beginning in 2008.
For more information visit http://www.bobby.romander.com/
Thursday, August 7, 2008
What you need to know if Changing Careers
A neighbor might offer congratulations, a Good Neighbor helps you with the transition.
Questions you may have:
What do I do with the investments in my old retirement plan?
I’ve been saving, but what do I do until I can start in my new company’s plan?
What happens to my group health and life insurance?
Make the Most of your Old Retirement Plan
The money from your previous employer’s retirement plan may be one of your largest assets. Know your options to make an informed decision about what to do with those funds.
Roll Your Investments Directly into a State Farm IRA and:
Avoid paying current federal income taxes and penalty taxes.
Allow your savings to grow tax-deferred: no amount in the IRA will be taxable until withdrawn from the IRA. Tax-deferred growth enables your money to grow faster than it would in a taxable account.
Move Your Investments to your New Employer's Plan and:
Continue to grow your money tax-deferred and avoid income tax and the 10 percent tax penalty.
Consider the new plan guidelines that may not be as flexible as a traditional IRA or may not accept assets from your previous plan. Check with your new plan’s administrator for details.
Leave Your Assets Where They Are
The easiest option, your money will continue to grow tax-deferred. The plan, however, may not provide this option for account balances under a certain specified amount.
Cash Out Your Investments
You’ll have a ready supply of money to spend or invest as you see fit. Note that your former employer must withhold 20 percent of the balance for federal income tax purposes. You may be subject to state income taxes and the 10 percent federal withdrawal tax penalty.
Comparing Your Options
Consolidating old retirement accounts into a single, traditional IRA can be a great way to help simplify your retirement planning. Learn More (PDF 32 KB)
Continue Saving
Begin saving as soon as possible if your new employer offers a 401(k), 403(b), or another retirement savings plan.
If you must wait for eligibility, or none is offered, then continue to contribute to a traditional or Roth IRA.
Talk it over with you Insurance Agent
Sit down with your agent to discuss your investment options, including:
Mutual Funds
Annuities
Certificates of Deposit
Gather the necessary paperwork from the plan administrator from your old job. Your agent will initiate the rollover, and we will notify you when it is complete.
Know when you are Eligible for Insurance Benefits:
Protect Your Family’s Future
Health insurance is important in the event that you, or any member of your family, are ever sick or injured. Having this coverage will help protect you from financial hardships.
Disability insurance helps cover financial responsibilities should you have an illness or injury that makes you unable to work.
Life insurance can provide for your loved ones when you’re no longer here to help.
If your new employer doesn’t offer health or disability insurance, or if you’re self-employed, you may want to purchase coverage from your agent. Your agent also can help you determine the amount of life insurance coverage that’s right for you and your family.
Other Things to Consider:
Discuss important financial considerations with your human resources department.
Ask when your health, disability, and life insurance benefits will expire.
Calculate unused vacation, sick pay, and other compensation due.
If you have moved, notify your former employer of your new address.
For more information visit www.bobbyromander.com
Questions you may have:
What do I do with the investments in my old retirement plan?
I’ve been saving, but what do I do until I can start in my new company’s plan?
What happens to my group health and life insurance?
Make the Most of your Old Retirement Plan
The money from your previous employer’s retirement plan may be one of your largest assets. Know your options to make an informed decision about what to do with those funds.
Roll Your Investments Directly into a State Farm IRA and:
Avoid paying current federal income taxes and penalty taxes.
Allow your savings to grow tax-deferred: no amount in the IRA will be taxable until withdrawn from the IRA. Tax-deferred growth enables your money to grow faster than it would in a taxable account.
Move Your Investments to your New Employer's Plan and:
Continue to grow your money tax-deferred and avoid income tax and the 10 percent tax penalty.
Consider the new plan guidelines that may not be as flexible as a traditional IRA or may not accept assets from your previous plan. Check with your new plan’s administrator for details.
Leave Your Assets Where They Are
The easiest option, your money will continue to grow tax-deferred. The plan, however, may not provide this option for account balances under a certain specified amount.
Cash Out Your Investments
You’ll have a ready supply of money to spend or invest as you see fit. Note that your former employer must withhold 20 percent of the balance for federal income tax purposes. You may be subject to state income taxes and the 10 percent federal withdrawal tax penalty.
Comparing Your Options
Consolidating old retirement accounts into a single, traditional IRA can be a great way to help simplify your retirement planning. Learn More (PDF 32 KB)
Continue Saving
Begin saving as soon as possible if your new employer offers a 401(k), 403(b), or another retirement savings plan.
If you must wait for eligibility, or none is offered, then continue to contribute to a traditional or Roth IRA.
Talk it over with you Insurance Agent
Sit down with your agent to discuss your investment options, including:
Mutual Funds
Annuities
Certificates of Deposit
Gather the necessary paperwork from the plan administrator from your old job. Your agent will initiate the rollover, and we will notify you when it is complete.
Know when you are Eligible for Insurance Benefits:
Protect Your Family’s Future
Health insurance is important in the event that you, or any member of your family, are ever sick or injured. Having this coverage will help protect you from financial hardships.
Disability insurance helps cover financial responsibilities should you have an illness or injury that makes you unable to work.
Life insurance can provide for your loved ones when you’re no longer here to help.
If your new employer doesn’t offer health or disability insurance, or if you’re self-employed, you may want to purchase coverage from your agent. Your agent also can help you determine the amount of life insurance coverage that’s right for you and your family.
Other Things to Consider:
Discuss important financial considerations with your human resources department.
Ask when your health, disability, and life insurance benefits will expire.
Calculate unused vacation, sick pay, and other compensation due.
If you have moved, notify your former employer of your new address.
For more information visit www.bobbyromander.com
Tuesday, August 5, 2008
Retirement Made Easy # 4
Already Retired?
A neighbor might attend your retirement party, a Good Neighbor helped make your retirement possible.
Thought Starters
How much can I spend in my retirement?
When do I have to start using my retirement savings?
Will my money last?
How will taxes affect my income in retirement?
What do I do with the money sitting in my 401(k)?
What happens if my health changes?
Review all of Your Income Sources
People are living longer so demands on your resources are greater than ever before. To help maximize and protect yours, consider:
Leaving a portion of your investments within a higher risk allocation that is adjusted for a longer timeline.
Placing two to three years of expenses in a liquid account for market downturns. Interest Bearing Savings, Checking, or Money Market accounts are good for this purpose.
Reviewing your asset allocation with your State Farm agent. Using our Client Portfolio Report, your agent will determine your comfort with investment risk. Then, your agent will compare how your assets are invested in stocks, bonds, and cash with a model portfolio based on your risk tolerance.
Annuities, which can help protect you against outliving your income.
Deciding when to take Social Security benefits. At 62, you can begin receiving your Social Security benefits but waiting until your Full Retirement Age will entitle you to your entire retirement benefit. For more information, visit the Social Security Web site.
Any other income sources including pensions, a part-time job or consulting work, income from a rental property, etc.
Make a plan for Distributing Funds
A common mistake is to withdraw too much money in the early years of retirement. Have a sensible plan tailored to your needs and goals:
Use Calculate My Retirement to help you estimate retirement spending.
All the tools to help you create a more detailed analysis can be found at: www.bobbyromander.com
Sign up for Medicare & Prescription Drug Coverage
Generally, you can apply for your Medicare Benefits three months before your 65th birthday. State Farm offers Medicare Supplement plans to cover the gaps where Medicare falls short.
Check into Prescription Drug (Part D) Plans. Your State Farm agent offers options through an alliance with Humana®.
Check into Medicare Part C (Medicare Advantage) Coverage. Your State Farm agent offers option through an alliance with Humana.
Other Things to Consider
Protect Against the Unexpected
Concerned about the high cost of medical services and long-term care arrangements? Long-term care insurance can be the answer.
Stay mentally, socially, and physically fit. Choose the lifestyle that fits you best,if it's getting a part-time job, volunteering for your favorite non-profit, or joining a gym.
Protect Your Family's Future
Life insurance can help provide for your loved ones when you’re no longer there to help. Review your current life insurance policies to determine if they adequately cover your family’s needs.
Set up a will or make sure that your current will is up to date.
Create an estate plan that:
Provides cash payment of estate expenses including federal estate tax.
Provides income to family members after you’re no longer here.
Provides for the disposition of a business at death.
Distributes assets to family members and other heirs with the least amount of loss possible.
An estate plan is an ongoing process that involves the creation, conservation, and distribution of property. Your plan can be as simple as having a will, or it could require the use of life insurance, trusts, business continuation plans, or charitable arrangements.
We can assist you with the first steps of estate planning — analyzing your estate. Talk to your agent today about this service. For more informations visit www.bobbyromander.com
A neighbor might attend your retirement party, a Good Neighbor helped make your retirement possible.
Thought Starters
How much can I spend in my retirement?
When do I have to start using my retirement savings?
Will my money last?
How will taxes affect my income in retirement?
What do I do with the money sitting in my 401(k)?
What happens if my health changes?
Review all of Your Income Sources
People are living longer so demands on your resources are greater than ever before. To help maximize and protect yours, consider:
Leaving a portion of your investments within a higher risk allocation that is adjusted for a longer timeline.
Placing two to three years of expenses in a liquid account for market downturns. Interest Bearing Savings, Checking, or Money Market accounts are good for this purpose.
Reviewing your asset allocation with your State Farm agent. Using our Client Portfolio Report, your agent will determine your comfort with investment risk. Then, your agent will compare how your assets are invested in stocks, bonds, and cash with a model portfolio based on your risk tolerance.
Annuities, which can help protect you against outliving your income.
Deciding when to take Social Security benefits. At 62, you can begin receiving your Social Security benefits but waiting until your Full Retirement Age will entitle you to your entire retirement benefit. For more information, visit the Social Security Web site.
Any other income sources including pensions, a part-time job or consulting work, income from a rental property, etc.
Make a plan for Distributing Funds
A common mistake is to withdraw too much money in the early years of retirement. Have a sensible plan tailored to your needs and goals:
Use Calculate My Retirement to help you estimate retirement spending.
All the tools to help you create a more detailed analysis can be found at: www.bobbyromander.com
Sign up for Medicare & Prescription Drug Coverage
Generally, you can apply for your Medicare Benefits three months before your 65th birthday. State Farm offers Medicare Supplement plans to cover the gaps where Medicare falls short.
Check into Prescription Drug (Part D) Plans. Your State Farm agent offers options through an alliance with Humana®.
Check into Medicare Part C (Medicare Advantage) Coverage. Your State Farm agent offers option through an alliance with Humana.
Other Things to Consider
Protect Against the Unexpected
Concerned about the high cost of medical services and long-term care arrangements? Long-term care insurance can be the answer.
Stay mentally, socially, and physically fit. Choose the lifestyle that fits you best,if it's getting a part-time job, volunteering for your favorite non-profit, or joining a gym.
Protect Your Family's Future
Life insurance can help provide for your loved ones when you’re no longer there to help. Review your current life insurance policies to determine if they adequately cover your family’s needs.
Set up a will or make sure that your current will is up to date.
Create an estate plan that:
Provides cash payment of estate expenses including federal estate tax.
Provides income to family members after you’re no longer here.
Provides for the disposition of a business at death.
Distributes assets to family members and other heirs with the least amount of loss possible.
An estate plan is an ongoing process that involves the creation, conservation, and distribution of property. Your plan can be as simple as having a will, or it could require the use of life insurance, trusts, business continuation plans, or charitable arrangements.
We can assist you with the first steps of estate planning — analyzing your estate. Talk to your agent today about this service. For more informations visit www.bobbyromander.com
Retirement Made Easy # 3
Nearing Retirement
A neighbor might ask about your dreams, a Good Neighbor helps make your dreams a reality.
Thought Starters
What Do You Plan on Doing in Retirement?
See if you are staying on track and go to Calculate My Retirement. Don’t like the results? Making small changes can make a big impact for tomorrow. Here are some suggestions:
Contribute enough to your employer-sponsored plan to receive the full match. Contribute up to the maximum to a Roth IRA if you qualify. Add any additional contributions to your company plan. If you are 50 or older, use the “catch-up” contributions available to you.
As you approach retirement, it may be a good time to:
Protect Against the Unexpected
Will your current health coverage continue through retirement? If not, learn more about how individual health insurance can help protect your assets. How can you protect yourself against outliving your income? Learn more about annuities and how they can help you achieve your goals.
A neighbor might ask about your dreams, a Good Neighbor helps make your dreams a reality.
Thought Starters
- When can I retire?
- How much will I need to retire?
- Am I saving enough?
- How do I choose the right investments for me?
What Do You Plan on Doing in Retirement?
- Will you stay in your current home or relocate?
- Are you planning to work part time, consult, or start a second career?
- What hobbies or interests are you planning to pursue?
Determine Your Expenses in Retirement
Retiring in less than five years? Use 70 to 80 percent of your current income to calculate the money you’ll need for retirement. It’s not necessary to use 100 percent of your current income because some expenses should be lower or eliminated in retirement like:- Housing (if your mortgage is paid off before you retire)
- Working costs (work clothes, membership dues, going out to lunch, etc.)
- Retirement saving
Retiring in six or more years? Use 100 percent of your current income in calculating the money you’ll need to retire because you’re probably uncertain about the kind of retirement you will want.
Are You on Track?See if you are staying on track and go to Calculate My Retirement. Don’t like the results? Making small changes can make a big impact for tomorrow. Here are some suggestions:
Boost Your Overall Retirement Savings
Tighten Your Budget to Invest the Savings
- Establish a “fun” money account and use those funds for what ever you desire. When the money runs out, no more spending on discretionary items until the next time you add money.
- Consolidate your credit cards and pay them off as quickly as possible.
- Refinance your mortgage.
- Forego certain activities, such as travel or large expenditures.
Adjust Your Retirement Timeline
- Consider retiring later to give yourself more time to save.
- Many retirees supplement their income with a part-time job or becoming self-employed.
As you approach retirement, it may be a good time to:
Conduct an Asset Allocation Analysis. Your agent can provide you with a Client Portfolio Report to:
- Compare how your assets are invested in stocks, bonds, and cash with a model portfolio based on your risk tolerance.
Consider the Risk of Your Portfolios.
- You may want to seek a combination of investments that are more conservative because you have a shorter time frame to compensate for the inevitable fluctuations of the market.
- Consider putting part of your retirement savings into an annuity that may enable you to receive a guaranteed income for your lifetime. State Farm offers various annuity products. Talk to your agent to determine if they are right for you. Guarantees based on the claims paying ability of the issuing life insurance company.
Simplify your Life
Do you have retirement accounts from previous employers? Consider rolling over the assets from your old 401(k)s and other employer-sponsored plans to a traditional IRA. A direct rollover means you can:
- Avoid paying federal income taxes and penalty taxes.
- Continue to grow your tax-deferred savings.
- Reallocate your funds if your goals may have changed since you opened your retirement account.
Learn more about rollovers and transfers.
To begin a direct rollover, see your former employer’s plan administrator for help.
Protect Against the Unexpected
Establish your Legacy
Rest easier knowing your loved ones will be provided for when you’re no longer here to help.
- Life insurance can be an easy decision.
- Make sure your will is up to date.
- Start thinking about making provisions to pass along assets to your heirs or favorite charity.
For more information about retirement visit www.bobbyromander.com
Thursday, July 31, 2008
Retirement made easy # 2
(This is the second blog for retirement, it focuses on those who have just begun to save for retirement.)
A neighbor might tell you to save more, a Good Neighbor helps you develop a plan.
Thought Starters if you are already saving
What kind of retirement am I hoping to have?
What do I want to do?
Where do I want to live?
How do I get there?
Am I on track?
What are my best choices for saving for my future?
You’re already saving regularly for your future and are on your way to achieving your retirement goals. Here are some tips to help you stay on track:
Continue Saving for Retirement
Invest in an IRA
If you haven’t already, now is the time to start.
State Farm offers you both traditional and Roth IRA account options. Talk with your State Farm agent about opening an account today.
With an IRA, your money grows tax-deferred, so your earnings are exempt from federal income tax until you begin withdrawing money for retirement.1
You can contribute up to $5,000 a year to your IRA(s), even if you already participate in a retirement program at work.
Visit the IRA Learning Center.
Use Your Employer-Sponsored Retirement Plans
Are you taking advantage of them? Use payroll deductions to invest in your 401(k) or other similar employer-sponsored retirement plans, especially if your employer matches your contributions.
Learn more about Retirement Plans for Businesses.
Periodically Re-Calculate your Retirement Goals
You’ve probably been promoted, earning more money than when you started your retirement savings plan. Changing your standard of living can change your retirement income goals.
Re-calculate how much you’ll need for retirement every few years.
As a general rule, a retirement income of 70 to 80 percent of the amount you are living on in the months before you retire can help maintain your standard of living during retirement.
Check to see if you are on track with your retirement savings by visiting www.calculatemyretirement.com.
Simplify Your Life
As you change jobs — or even careers — what should you do with the retirement accounts from your previous employer(s)? One option is to directly roll over assets from your 401(k) and other employer-sponsored plans into a traditional IRA. A direct rollover allows you to:
Avoid paying federal income taxes and penalty taxes1
Continue to grow your savings tax-deferred
Reallocate your funds, as your goals may have changed since you began saving in your previous company’s retirement account.
To begin a direct rollover from your qualifying employer-sponsored plan to a traditional IRA, see your plan administrator from your previous job for the appropriate paperwork.
Other Things to Consider
Safe Guard Your Income
Protect yourself against costly medical expenses and the sudden loss of your income due to an illness, injury, or permanent disability.
Health insurance is important if you or a family member gets sick or injured. This coverage will help protect you from any financial hardships due to expensive medical bills.
Disability insurance helps cover financial responsibilities if you can’t work because of an illness or injury.
If your employer doesn’t offer health or disability insurance, or if you’re self-employed, talk with your State Farm agent about health and disability insurance.
Protect Your Family's Future
Having the proper amount of life insurance can help provide for your family when you’re no longer here to help.
Your State Farm agent can help you determine the amount of coverage that’s right for you and your family.
It’s also important to have a will. In your will you can make proper provisions for your children’s education.
Also, make sure you’ve properly designated your beneficiaries for insurance policies and retirement accounts.
The federal and state governments have created tax-favored accounts so saving for education can reduce your taxes, making saving for college an even easier decision. The availability of such tax or other benefits may be conditioned on meeting certain requirements.
We offer several options for college education savings plans:
College Savings Plan Sponsored by the State of Nebraska Coverdell Education Savings Account
Uniform Gift to Minors Act/Uniform Transfer to Minors Act
Establish a Budget
Do you know where your money is going? Budgeting is the first step toward financial freedom. Use our budget calculator to learn about your spending habits.
Reduce your Debt
Taking on some debt, like a mortgage, is often necessary and may even be a good thing. Carrying consumer debt, however, means that the money you could be investing and growing for your future is being used to finance your debt instead. Working to reduce personal debt by limiting your purchases or refinancing your loans at a lower rate is a good first step for any household to consider.
Establish an Emergency Fund
Many people set aside an amount of money equal to three to six months of their net income (take-home pay) or expenses. Store this money in a separate interest-bearing savings, checking, or money market account to make sure the money is easy to access should you need it.
We are glad to help you create a personal retirement plan that works best for you. For more information visit www.bobbyromander.com
A neighbor might tell you to save more, a Good Neighbor helps you develop a plan.
Thought Starters if you are already saving
What kind of retirement am I hoping to have?
What do I want to do?
Where do I want to live?
How do I get there?
Am I on track?
What are my best choices for saving for my future?
You’re already saving regularly for your future and are on your way to achieving your retirement goals. Here are some tips to help you stay on track:
Continue Saving for Retirement
Invest in an IRA
If you haven’t already, now is the time to start.
State Farm offers you both traditional and Roth IRA account options. Talk with your State Farm agent about opening an account today.
With an IRA, your money grows tax-deferred, so your earnings are exempt from federal income tax until you begin withdrawing money for retirement.1
You can contribute up to $5,000 a year to your IRA(s), even if you already participate in a retirement program at work.
Visit the IRA Learning Center.
Use Your Employer-Sponsored Retirement Plans
Are you taking advantage of them? Use payroll deductions to invest in your 401(k) or other similar employer-sponsored retirement plans, especially if your employer matches your contributions.
Learn more about Retirement Plans for Businesses.
Periodically Re-Calculate your Retirement Goals
You’ve probably been promoted, earning more money than when you started your retirement savings plan. Changing your standard of living can change your retirement income goals.
Re-calculate how much you’ll need for retirement every few years.
As a general rule, a retirement income of 70 to 80 percent of the amount you are living on in the months before you retire can help maintain your standard of living during retirement.
Check to see if you are on track with your retirement savings by visiting www.calculatemyretirement.com.
Simplify Your Life
As you change jobs — or even careers — what should you do with the retirement accounts from your previous employer(s)? One option is to directly roll over assets from your 401(k) and other employer-sponsored plans into a traditional IRA. A direct rollover allows you to:
Avoid paying federal income taxes and penalty taxes1
Continue to grow your savings tax-deferred
Reallocate your funds, as your goals may have changed since you began saving in your previous company’s retirement account.
To begin a direct rollover from your qualifying employer-sponsored plan to a traditional IRA, see your plan administrator from your previous job for the appropriate paperwork.
Other Things to Consider
Safe Guard Your Income
Protect yourself against costly medical expenses and the sudden loss of your income due to an illness, injury, or permanent disability.
Health insurance is important if you or a family member gets sick or injured. This coverage will help protect you from any financial hardships due to expensive medical bills.
Disability insurance helps cover financial responsibilities if you can’t work because of an illness or injury.
If your employer doesn’t offer health or disability insurance, or if you’re self-employed, talk with your State Farm agent about health and disability insurance.
Protect Your Family's Future
Having the proper amount of life insurance can help provide for your family when you’re no longer here to help.
Your State Farm agent can help you determine the amount of coverage that’s right for you and your family.
It’s also important to have a will. In your will you can make proper provisions for your children’s education.
Also, make sure you’ve properly designated your beneficiaries for insurance policies and retirement accounts.
The federal and state governments have created tax-favored accounts so saving for education can reduce your taxes, making saving for college an even easier decision. The availability of such tax or other benefits may be conditioned on meeting certain requirements.
We offer several options for college education savings plans:
College Savings Plan Sponsored by the State of Nebraska Coverdell Education Savings Account
Uniform Gift to Minors Act/Uniform Transfer to Minors Act
Establish a Budget
Do you know where your money is going? Budgeting is the first step toward financial freedom. Use our budget calculator to learn about your spending habits.
Reduce your Debt
Taking on some debt, like a mortgage, is often necessary and may even be a good thing. Carrying consumer debt, however, means that the money you could be investing and growing for your future is being used to finance your debt instead. Working to reduce personal debt by limiting your purchases or refinancing your loans at a lower rate is a good first step for any household to consider.
Establish an Emergency Fund
Many people set aside an amount of money equal to three to six months of their net income (take-home pay) or expenses. Store this money in a separate interest-bearing savings, checking, or money market account to make sure the money is easy to access should you need it.
We are glad to help you create a personal retirement plan that works best for you. For more information visit www.bobbyromander.com
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