Gen Xers — Are You on Track for Retirement?

Gen Xers — Are You on Track for Retirement?

Did that AARP notification take you by surprise? If so, you’re not alone. Some members of Generation X — those born between the early 1960s and late 1970s — are feeling caught off guard by how quickly retirement is approaching

When it comes to preparing for retirement, 34 percent of Gen Xers are likely to say that they have no strategy planned according to the Transamerica Center for Retirement Studies. This is a higher percentage than both Baby Boomers and Millennials. The average Gen X household has about $64,000 in retirement savings, and it’s not surprising that many feel concerned about the prospect of their golden years.

Ok Xers, it’s time to put together a strategy and look for ways to align your timeline with your goals. Here are a few things that can help you get on track.

Get Specific, Really Specific

First of all, you need to determine your timeline for retirement and the lifestyle you want. Think about your expectations for things like housing, travel, entertainment and hobbies along with their associated costs. Once you have an idea of the monthly income you’ll need to support your desired retirement, you can work backward to see what you should set aside now, as well as what other tools and strategies can help you reach your goals.

Manage Sandwich Obligations

People call Gen X the “sandwich generation” for good reason. You’re dealing with aging parents at the same time your kids are going to college. There’s a good chance that you have some monetary obligations causing additional stress as you prepare for retirement. Put together a plan that prioritizes retirement savings and look for other ways to support your parents and children. You might not be able to help financially as much as you’d like, but now is the time to make sure you’re taking care of your needs. You can’t help others if you fall too far behind yourself.

Get Debt Under Control

If you have debt, start to address it immediately. Tackle high-interest debt first, getting rid of the most expensive obligations, and work your way down from there. Negotiate with creditors for lower interest rates. You don’t have to be completely debt free by the time you retire. But the less you have, the better your position will be.

Consider Long-term Care

Custodial care can quickly eat up a lifetime of retirement savings. But the right long-term care policy can help defray costs during this time. Most policies take your age into account when determining price. The earlier you sign up, the more affordable it’s likely to be. This is one area in particular where procrastination can be costly.

Make Catch-up Contributions

Once you turn 50, IRS rules allow you to set aside more money in tax-advantaged retirement accounts. This is a good time to ramp up your retirement savings and bolster your portfolio. If you need to beef up your retirement accounts, start doing so now. If you’re lucky enough to get a yearly bonus, this is a good use for it.

Think About Social Security

Those born in 1960 or later can begin collecting benefits at age 62, but they’ll receive less each month than if they wait until their full retirement age at age 67. Consider your timeline and lifestyle preferences as well as your tax-advantaged retirement accounts. Work with a WellCents financial professional to help you weigh when you should start collecting Social Security and balancing it with withdrawals from other accounts.

Bottom Line

Gen Xers are known for their independence. But you don’t need to go it alone when it comes to your retirement. Take advantage of the resources available to you to make sure you’re on track to the retirement you want. Contact your WellCents financial professional today.


Understanding Your Retirement Summary Plan Description

Understanding Your Retirement Summary Plan Description

Investing in an employer-sponsored Retirement plan is a powerful tool to boost your retirement readiness. But did you know that all Retirement plans are not created equal?

While they all share certain features, such as the ability to lower your taxable income by deferring and investing pretax dollars to save for retirement, plans can differ in terms of how quickly you become fully vested, whether you’re able to take a loan against your Retirement balance and whether your company will match some of your contributions.


The “Retirement plan” derives its name from the section of the IRS tax code that applies to it, and the official plan documents are quite complex for the average investor to understand. Luckily, your employer is also required to provide you with a document called a Summary Plan Description, which details many important features of your Retirement in plain English so that they’re easier to understand.


If you don’t have this document in your possession, simply contact your HR department or benefits manager to request a copy. You can find very helpful information inside it, including:


How to qualify for the plan. This might include an age requirement as well as a minimum duration of service within your organization.


Employer match. Your employer may match a certain percentage of your Retirement contributions up to a certain amount. For example, they might match 100% of your first 3% of contributions and then 50% of the next 3%. If you have this benefit, your Summary Plan Description will specify the details.


How long it will take to be vested. Each Retirement plan has a specific vesting schedule, and this refers to how long it takes you to own a percentage of your employer’s contributions.


Whether you can take a loan against the money in your Retirement. If loans are permitted, you’ll be required to pay back the loan with interest to your account. The terms and conditions of these loans, if available, will be outlined.


How to access your account balance and make changes to your investments. You can look up how to access your Retirement information online or by phone — and learn who your point of contact for your Retirement is within your organization.


The Summary Plan Description is a great starting point for understanding the features and benefits of your Retirement plan. But if you have additional questions, set up an appointment to meet with your financial adviser, who can explain the plan in greater detail an answer your questions.

How to Build Wealth

How to Build Wealth

Get rich slow with these simple strategies — and a little discipline.

What does wealth look like to you? Your mental picture might be different than others. But for a lot of folks, wealth isn’t an over-the-top ride or a mega-mansion. Rather, it’s the freedom from financial burdens and the confidence that you can retire to an enjoyable and relatively worry-free life. Fortunately, that outcome is achievable for many people with some planning and a little discipline.

Save Now and Often

If you haven’t been saving regularly and consistently, start right away. The mantra is “pay yourself first.” Make saving for retirement a priority, and make it easy by having contributions to your 401(k) automatically withdrawn from your paycheck. You can arrange this through your HR Department. If you want to save additional funds, consider regular, automatic transfers from your checking account to a savings account.


Take Advantage of Tax-Deferred Growth

You don’t pay taxes on money put into your 401(k), and it grows tax free until you withdraw it. This means you have more of your money working for you year after year. Upon retirement, you’ll owe taxes, but you’ll have a larger account balance to draw from due to the tax advantages you’ve enjoyed over the years.


Don’t Leave Free Money on the Table

Many employers offer a matching contribution for the retirement plans they sponsor. If yours is one of them. they’ll match all or a percentage of your 401(k) contributions up to a certain amount. That’s free money — and there’s no better deal anywhere in the world of retirement savings. So don’t miss out!


Build Equity

Owning a home can be an important component of wealth, and comprises about a third of the overall net worth for American families. The industry rule of thumb is that you shouldn’t pay more than 28% of your gross income for housing (loan principal, interest, taxes and insurance). So buy a house if you want to be a homeowner but not so much house that it cripples your ability to add to your retirement savings and build wealth. It’s tempting to think, “I’ll be making more money in five years, so this mortgage won’t be a problem.” But when in doubt, underbuy rather than overbuy. As you pay down your mortgage, you build valuable equity that you may be able to borrow against should you need to in the future.


Keep Spending in Line

Live within your means. Don’t overbuy housing, transportation, entertainment, clothing or anything else. The less you spend, the more you can save. And the earlier you start to save, the more time that money can grow. Do you really need that top-tier cable package? Can you use coupons at the grocery store? Your grandparents were right when they said, “a penny saved is a penny earned,” and those pennies can really add up.


Manage Debt

Some debt can be necessary and useful. It can help you afford a home, transportation or a college degree. But don’t get in over your head. Weigh the costs and benefits of a new car payment versus increasing 401(k) contributions for a more secure retirement. A big warning sign is the need to use credit cards to pay for everyday expenses. Carrying high-interest debt — like a hefty credit card balance — can seriously undermine your ability to build wealth.


Insure to Be Sure

You don’t want to lose the wealth you’ve built in the event of an emergency, so insure yourself and your assets. A full-line insurance agent can help you choose appropriate plans for home, auto, life, disability and long-term care. They may suggest that you purchase an umbrella policy that protects you from legal liability as well.


Get Expert Advice

Especially when you get into more complex areas of investing and tax planning, it’s prudent to seek out professional advice. Financial advisors aren’t just for the already wealthy — they can help you get there. Discuss your personal vision of wealth with your advisor and work with them to start turning that vision into reality so one day, your future self can raise a glass to toast your present-day prescience and persistence.



Should I Buy or Lease a New Car?

Should I Buy or Lease a New Car?

Your once reliable set of wheels is getting less reliable lately, and you’re longing for that new car smell once again. You meander through the local dealership lot trying to avoid the salesperson because you know the very first question that they’re going to ask you is, “Do you want to lease — or buy?”


What’s the better choice?


The short answer is … it really depends. The longer answer depends on your particular circumstances and priorities. Let’s drill down and look under the hood (so to speak) of each option.




Pros: With a lease, you generally can drive a new car at a lower monthly cost. The leasing process is perhaps less onerous than buying, and you can get into a new car every few years. With a lease, you can score some deductions if the vehicle is used for business. So, the bottom line is that you often get more new car for a lower initial cash outlay by leasing, and you can enjoy that new car smell every couple of years.


Cons: When you lease, you aren’t building any equity toward your next vehicle. So you’re starting from scratch each time. Additionally, you may have to contend with costly end-of-lease charges, mileage overage costs and incidental damage charges. You may even have to pay for new tires for a car you turn in.




Pros: When you purchase a car, you know for certain the price you’ll pay without having to wonder about unexpected fees down the road. You can also build equity in the vehicle over time, which can be particularly beneficial if you intend to keep the car and drive it long after the loan period. Plus, since it’s yours, you can customize your rims, your stereo or anything else you want as you wish (as long as its street legal). And you can sell or trade in your vehicle whenever it suits you rather than at a predetermined end-of-lease date. 


Cons: Buying is usually more expensive than leasing at the outset. And you can’t just turn it back in and walk away — you eventually will have to sell or trade in the car. Finally, if you buy new, you’ll take a big depreciation hit as soon as you drive off the dealer lot.


Your Ride, Your Reasons


Getting back to the original question, if the goal is to spend as little as possible to get into that new car, and you think you’ll be ready for another vehicle in a few years, then leasing likely makes the most sense. However, if you can’t wait to rebuild your engine and add a mega-sized subwoofer in your trunk — and you want more control over when your next purchase may be, than buying new might be right for you.


But remember that the real cost of a car is not only the price tag, it’s how much it costs you during the entire time you own it, including maintenance, gas, repairs and insurance. When analyzing the per-month cost of leasing vs. owning, remember to amortize the equity you have in the car over the entire period of ownership.


If you’re still confused, ask your financial advisor to help you run the numbers.

How Do I Save for My Child’s College and Retirement?

How Do I Save for My Child’s College and Retirement?

You juggle multiple financial priorities, whether it’s buying a house, having children, starting a business or buying a car. Saving for retirement and a child’s college fund at the same time is no different, but that’s not to say it’s easy.


Get It Down on Paper

Start by setting a budget and timeline for both retirement and college. While the college start date is probably somewhat fixed, you may have more latitude concerning your retirement. Once the kids are old enough, include them in the conversation about how much you can afford to help with college and what they can do.


It’s important to set realistic goals about the types of colleges within your budget. Don't let higher education costs get out of control. If your child has their heart set on a specific school or major, there may be ways to lower costs (e.g., subject-specific scholarships and grants). The expectation shouldn't be that you're going to write a lot of checks. And always have a backup plan or safety school.


Controlling College Costs

Explore ways to reduce college expenses. Help your child identify special interests early on. Athletics? Music? Science? Math? Money may be available for all of those IF your child is exceptional. Identify colleges early too. See if they can attend special interest camps there to (a) see how they like it, and (b) meet faculty who might recommend them for a grant/scholarship.


Also, 529 plans can be a good way to divide retirement from college savings and offer a number of benefits, including the option of contributions by relatives. Coverdell Education Savings Accounts (ESA), sometimes called education IRAs, are tax-advantaged savings vehicles that allow tax-free distributions for qualified educational expenses. Read more about the rules and restrictions of the program in the link below.


Reevaluating Retirement

Similarly, find ways to boost your retirement savings or scale back your retirement goals. If time is tight, consider whether you can work a little longer or adjust the kind of retirement lifestyle you’re budgeting for. For example, could you downsize your home or move to an area with a lower cost of living?


Also, make sure you’re contributing at least enough to your employer-sponsored 401(k) to earn the maximum company match — this is free money, and you don’t want to leave it on the table. What you also don’t want to do, however, is ramp up your level of investment risk beyond what is appropriate for your personal tolerance and your retirement timeline just to try to boost returns.


The most important thing you can do during this juggling act is to sit down and have a frank conversation with your financial advisor about your goals. He or she may be able to come up with options you haven’t even considered. 




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