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Evaluate How Much You Need for Retirement

Evaluate How Much You Need for Retirement

Many people who are saving for retirement haven’t taken the time to figure out how much they may need when they retire. Financial planners who do pension consulting point out that saving without a goal could leave you in trouble when you reach retirement. After all, how do you know if you’re saving enough if you don’t know how much you may need?

Factors to consider - One way to start figuring out how much you’ll need in retirement is to look at how much you’re spending now. That will at least provide you with a starting point. Remember, though, your expenses will change after you retire:

  • Expenses that may go down include income taxes, mortgage payments (particularly if you downsize), utilities, and expenses for children. Also, you may save money on commuting expenses (including gas, tolls, car payments, and insurance) and other work-related costs like clothing.
  • Expenses that could go up include travel and entertainment costs and health care. While joining Medicare can reduce your expenses, you may need additional insurance and your costs may go up if your health declines.

Most financial advisors believe you’ll need about 80 percent of your current income in retirement to maintain your current standard of living1.

Review Your Income - You’ll need to assess any income you’re going to receive in retirement, such as Social Security, a pension, rent from property you may own, or other recurring income you receive.

Once you add up your income and subtract your expenses, you’ll know how much you need have saved by the time you reach retirement.

Tags: retirement planning, retirement, evaluate

7 Tips To Prepare You for Retirement

7 Tips To Prepare You for Retirement

A secure and enjoyable retirement doesn’t just happen. You need to plan for it. And the sooner you start planning, the more time you’ll have to make changes and adjustments to meet your retirement goals.

Here are seven things you should consider for your retirement plan.

What will you do? Retirement could last 20 or more years, and you’ll probably need to find something to do with that time. Most happy retirees set goals for themselves. Also, you should have some idea of what you want to do to make sure you can pay for it.

Will you work? More and more people plan on working after retirement. If you do, make sure you realistically assess the opportunities for the kind of work you want to do.

Where will you live? This is going to be affected by other decisions, like what you want to do after retirement. If you want to spend time with your family, you’ll need to live nearby. If you plan to work, you need to make sure you live near potential job opportunities.

How much will you get from Social Security? You can get a personalized estimate of your SS payments at Make sure you look at how your benefit changes depending on what age you are when you sign up and how best to coordinate with your spouse (if applicable) to maximize your benefit.

How much additional money will you need? Once you know what you can expect from Social Security, you need to determine if that and your other assets are enough to pay your monthly bills.

Do you have health insurance? You’re eligible for Medicare at age 65, but you’ll almost certainly need some form of supplemental insurance as well. If you retire before 65, you’ll need to find another form of coverage until then, either through private insurance or your state’s health insurance exchange.

Have you stress-tested your finances? The unexpected will still happen – you may need a new roof, a new car, or have an unexpected health issue. Make sure you’ve got an emergency fund to help you get through these situations.

Tags: retirement planning, retirement


Kestra IS, Kestra AS, and NFP Retirement do not approve, endorse, nor are affiliated with these sites or any of the material contained therein. NFPR-2019-72 ACR# 324845 8/19

Where to Stash Your Emergency Fund (Hint: Not the Mattress)

Where to Stash Your Emergency Fund (Hint: Not the Mattress)

One of the best things you can do for your financial wellness is to set up an emergency fund that covers at least three months of your regular household expenses. It may take time to set aside this amount of money, but once you do, it can take a lot of pressure and stress off of you should the unexpected occur.

But the question is, where should you put this money? Hint: It’s not under the mattress. What you want is a place that will be relatively safe from fluctuations in the stock market and broader economy. You also want your funds to be relatively liquid, which means they are easily convertible to cash that you can readily spend.

The following are options to consider for your emergency fund:

Money Market Accounts. Money market funds are designed to maintain a stable share price of $1 per share. And this is usually the case, although they can breach that benchmark during an intensive market downturn. Money market funds typically give a fairly low but steady rate of return. However, unlike many bank accounts, they’re not generally FDIC insured.

No-Penalty Certificates of Deposit (CDs). CDs are commonly available in very short (1-3 month) to long (5-10 month) maturity dates. These shorter-term CDs are usually FDIC insured and can be an appropriate place to hold emergency funds as long as you can wait until the maturity date. Typically, there’s a penalty for early withdrawal, although some offer a no-penalty option that can be more convenient for your emergency fund. You may however, sacrifice a higher interest rate for the flexibility of no–penalty withdrawals.

High-Yield Savings Accounts. These are available through brick-and-mortar banks as well as online institutions. Typically, online savings accounts offer the highest yields - and often significantly higher than traditional institutions. Make sure that whatever bank you select, your funds are Federal Deposit Insurance Company (FDIC) insured. According to the FDIC, “The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.”

Roth IRA. This can be another good place to hold your emergency funds. Unlike a traditional Individual Retirement Account, taxes are paid prior to deposit (as opposed to deferred), and there’s no penalty for early withdrawal on your contributions, although withdrawals on any earnings may be subject to income taxes and a 10% penalty, depending on your age and how long the account has been established for.

Treasury Bills. You can purchase a Treasury Bill, or T-Bill, with a maturity date anywhere from a few days to 52 weeks with a minimum investment of only $100. You buy them at a discount and then receive the full face value on their maturity date. T-Bills are backed by the full faith and credit of the United States Government and are considered very safe.

The last thing you want to have happen when you have to tap your emergency fund is to find out its value has been diminished because of unfortunate stock market timing. Keep your fund safe and liquid while minimizing risk so that you can be confident your fund will be fully available to you when you need it.





Securities may be offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services may be offered through NFP Retirement, Inc. Kestra IS is not affiliated with NFP Retirement, Inc., a subsidiary of NFP.

Types of Financial Emergencies and Strategies to Prepare for Them

Types of Financial Emergencies and Strategies to Prepare for Them

While we don’t know when or where an emergency will strike, there’s a good chance you’ll have to deal with one eventually - that’s life. So it’s best to plan ahead for various types of crises that you may encounter. The foundation of your plan should be to establish an emergency fund that will cover at least three months of living expenses. However, there are a number of other steps that you can take to help protect yourself from difficulties you may face:

Health Crisis. You may have a health insurance plan sponsored by your employer, but do you understand your coverage? How much will you have to pay in terms of your deductible before expenses are covered, and what percentage will be paid for afterward? What about coverage for specific types of illnesses, including mental health problems and cancer? Additionally, do you have any dental or prescription eyeglass benefits? Knowing the answers to these and other questions should help guide your decisions about how much you should put aside for health emergencies. In addition, find out whether your employer provides disability insurance. If not, you could consider purchasing such a policy privately in case you become unable to work due to injury.

Job Loss. If you qualify for unemployment, how much would your benefit be and how long would you receive it in the state in which you are employed? COBRA (Consolidated Omnibus Budget Reconciliation Act) payments can allow employees who lose their jobs to continue to pay privately for their health insurance, but are usually substantially higher than employee contributions and are an additional expense that must be budgeted for in the event of job loss. Alternatively, you can research what healthcare options would be available to you through the Affordable Care Act (ACA)?

Vehicle Accidents. Auto insurance is another type of policy that many people have, but far too few understand in sufficient detail. It’s important to sit down with your provider and go through the types of coverage you have for damage to your vehicle, damage you cause to other people’s property and bodily injury for you, your passengers or anyone you might injure. You should also know your deductible. Lowering your coverage can save you on policy premiums but comes with increased risk — and the need to set aside additional money in an emergency fund.

Property Damage or Loss. Whether due to theft, storm damage or vandalism, you may someday face the prospect of having to repair or replace your personal property. A good homeowners insurance policy can go a long way toward mitigating this risk. However, there can be deductibles depending on the cause of the loss — as well as limits to your coverage. Additionally, many policies require specific riders for valuables such as jewelry, antiques, musical instruments and computer equipment.

Lawsuits. We live in a very litigious society, and the possibility exists that you’ll be faced with a personal lawsuit at one point or another in your lifetime. This is an area where it’s good to speak to a lawyer and a financial advisor as there are some specific ways to protect your assets depending on your situation, such as trusts, umbrella policies, business entities, retirement accounts and homestead exemptions.

While all risk can’t be eliminated or planned for in advance, there are many steps you can take to cushion the blow of the difficult events life may deal you. A conversation with your financial advisor regarding your assets and how to best protect them is a good place to start. And having that talk before you’re faced with a crisis can keep more of your options open.

How (Not) to Fund an Emergency

How (Not) to Fund an Emergency

No one likes to think about it, but emergencies are a part of life. But just because we don’t know exactly what will happen and when, that doesn’t mean we can’t help ourselves be more prepared for them financially. That’s why establishing an emergency fund with three months of expenses is considered a foundational component for any sound financial plan. Having the dedicated fund set aside in a safe, highly liquid account can help you weather the storms that life may occasionally bring your way.

If you don’t have adequate monies in reserve, you may be forced to resort to some of the following ways of managing a crisis, which you will see are less than optimal:

Credit Cards. Using credit cards to fund a crisis is a particularly bad idea, especially if you pay high interest rates on your balances. Also, when your life is in upheaval, it can be easier to miss payment deadlines. Should this occur, you may face steep late payment fees in addition to high interest rate charges. And making late payments or utilizing more of your available credit can also hurt your FICO (Fair Isaac Corporation) score that indicates your creditworthiness, potentially making it even more difficult to borrow in the future.

Payday Loans. These are typically among the most expensive types of loans consumers can take out. They’re intended for short-term needs (payday to payday) and are not intended for sustained borrowing. People who use them routinely can fall into the trap of deeper debt fueled by ever-accumulating interest charges. And the cycle can become very difficult to break over time. Avoid this type of predatory lending whenever possible.

Raiding Your 401k. While you can borrow from your 401k and repay yourself with interest, you will face stiff penalties if you’re younger than 59½ years old and for whatever reason are unable to repay the loan, in which case you can suffer a hefty 10% penalty. There can also be an opportunity cost in terms of the time that you’re divested. You can miss out on opportunities for your retirement funds to grow that can take months or even years to recoup.

Borrowing from Family. Asking your relatives for money is never easy. It can strain relationships, especially should you have difficulty repaying the loan on time. And that can be the last thing you need when you’re facing a crisis and in need of emotional support from your family. It could also put you in an uncomfortable position should your relative face a financial crisis of his or her own and expect you to return the favor. If you do go down this route, it’s a good idea to specifically spell out the terms and conditions of the loan and its repayment in writing so there are no misunderstandings.

Home Equity Line of Credit (HELOC). If you have a HELOC, you may be tempted to utilize this to deal with a financial emergency. And while this is an option that’s open to you, there are some things you should keep in mind before doing so. First, the interest rate on these instruments is usually variable, which can make your loan payments unpredictable and more difficult to budget for. Additionally, since a HELOC is backed by the equity in your home, it’s possible to become “underwater” on your home, a state where you owe more on the house than what’s it’s worth. Finally, if you were considering taking out a HELOC, be sure to ask about all of the associated fees and closing costs that you may also face.

When it comes to a financial crisis, the best defense is a dedicated emergency fund. If you don’t currently have one, add regular contributions to your monthly budget. Once you have that money in the bank, it can greatly reduce stress about the “what ifs” we all tend to worry about.


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