Retirement is a Lifelong Journey by Grant Barra

Whether your retirement is far away or just around the corner, one thing is certain: When it comes to achieving a comfortable retirement tomorrow, a consistent savings plan must be part of your lifestyle today.

Does this mean you have to trade your daily gourmet coffee for the office mystery blend? Not necessarily. Instead, commit to balancing your daily indulgences with responsible savings.

Start by checking to ensure your savings strategy is appropriate for your stage in life. Find your age range among the following series of profiles to discover how you can make saving a comfortable part of your long-term lifestyle.

In Your 20s

Current Realities – Your 20s bring a time of freedom, self-discovery and new adventures. It can also be the first time you’ve managed your own finances. You may find yourself juggling common expenses including:

• Rent
• Credit card debt
• Car loan
• Student loans

With freedom comes responsibility and your finances should be a top priority.

Immediate Actions

1. Arrange automatic savings. One of the advantages to your company’s 401(k) plan is automatic payroll deduction. When you receive your paycheck, money is already deducted and moved into your retirement savings account, so you don’t have to think about it.
2. Balance indulgences with savings. It’s OK to enjoy a night out with friends, after you’ve contributed as much as possible to your 401(k) plan. Create an overall budget to help you identify and prioritize indulgences you can and can’t live without.
3. Prepare for the unexpected. Things can change quickly. A job loss or unplanned car repairs can put you in a cash crunch. Start building an emergency savings fund to cover 3-6 months of living expenses.

Future Rewards – Saving for retirement as early as possible gives you a huge advantage – the luxury of time. The longer you let money grow, the bigger your savings can become. This is the power of compound interest. And it means you can invest a smaller dollar amount and potentially finish with a bigger retirement nest egg than if you started saving later.

In Your 30s

Current Realities – At this stage you may be family- or career-focused, or both. You may face new expenses including:

• Supporting a growing family
• Mortgage payments
• Saving for children’s college

As you advance in your career, your income may grow as well. This gives you even more opportunity to increase contributions to your 401(k) and fully fund an emergency fund.

Immediate Actions

1. Set goals. Set monthly savings goals for major life events: ·         College savings·         A new baby·         Six-month emergency fund·         Retirement
2. Maximize tax savings. The tax savings built into 401(k) plans can be useful at this stage when you may have other tax deduction opportunities as well, including a small business, children or mortgage interest.

Future Rewards – Time is still on your side in your 30s. With up to 35 years until retirement, your savings have plenty of time to grow. A disciplined financial plan will pay off when you can enter retirement with major expenses already covered.

In Your 40s

Current Realities – By this time, some monthly expenses may end, such as child care or a car loan. Others may begin, including:

• Purchasing investment property
• Paying college tuition

As your financial obligations shift, adjust your saving and spending habits.

Immediate Actions

1. Increase savings. As some expenses end, put that money into your retirement plan. Do the same for any work-related bonuses or pay increases.
2. Eliminate debt. Commit to paying off all outstanding consumer debts such as credit cards and car loans. Consider if and when you plan to pay off your home mortgage.
3. Use retirement savings for retirement only. It may be tempting to tap into your 401(k), but when you consider the monetary penalties involved, and the loss of future savings, borrowing against or withdrawing your retirement savings could prove costly.

Future Rewards – As your financial obligations change, you may be in a better position to fund your retirement account. Even with 20 years until retirement, the sooner you establish a solid financial plan – with a focus on saving and eliminating debt – the sooner you can retire.

In Your 50s

Current Realities – These may be your best earning years. Major monthly expenses may be behind you. Dream vacations may become a reality. Retirement is on the horizon. Know where you stand financially and what you need to change to meet your goals.  

Immediate Actions

1. Firm up your retirement savings. Take advantage of 401(k) “catch-up” options, which allow individuals over 50 to save an additional amount of pre-tax money.
2. Create a budget for retirement income needs. You may need 75-90 percent of your current income in retirement. Start examining your financial needs to determine exactly how much you need to achieve your desired lifestyle.
3. Consider where you will live. Do you plan to stay in your current home through retirement? Do you dream of a vacation home? Think about your real estate needs and prepare to take action.

Future Rewards – All the hard work and diligent savings you’ve practiced since your 20s is about to pay off. It’s up to you to decide when you are ready to retire.

Maximize Life’s Milestones

It’s possible to both enjoy life and save for retirement. Just make sure that as you journey toward retirement, you take steps to align your financial priorities with your stage in life. Remember: The most successful retirees made savings a long-term part of their pre-retirement lives, and started saving early!

- Grant Barra

Grant M. Barra, LUTCF, CLF®
Connect with me at www.linkedin.com/in/gbarra

Protecting Your Most Important Asset by Grant Barra

What’s your most important asset? Your home? Other property? Savings? For most Americans, one particular asset – your income – is more important than any of these. Everything most people own is dependent on their ability to earn an income. It’s that steady paycheck that allows you to hold on to what you have.

If you became unable to work because of sickness or injury, how would you pay your monthly bills? Generations of Americans continue to depend on disability income insurance, which was introduced by Insurance companies in the early 1900s. Disability income insurance provides protection for your income. It’s an affordable solution that pays a monthly benefit while you are disabled due to a covered sickness or injury and can’t work.

Nobody wants to think about becoming disabled, but ignoring the risks could result in a catastrophe. Can you afford to miss more than two months of work without having to borrow money? The problem is borrowing often isn’t feasible because it can be tough to get approved for a loan without an income. Social Security will pay disability benefits, but only after a lengthy waiting period. You can tap your savings, but that will exhaust most workers’ savings in about two months. Selling your assets is a last resort – but you may not get fair value for your assets and then you’ll have nothing.

Disability Income Insurance Provides A Bridge

Disability income insurance provides a bridge over times of trouble. Disability income insurance can be designed to provide a significant portion of your regular monthly income (generally 60 percent) and benefits can be timed to begin according to need.

Disability income policies also could continue to pay benefits during rehabilitation, job re-training and part-time employment. A survivor benefit would pay a lump-sum benefit to your beneficiary if you die during a period of disability. Optional features (riders) could be added to most disability income policies at extra cost. These may include a cost of living adjustment to compensate for inflation and a return of premium rider. This latter feature may allow the consumer to specify that a portion of the premiums (sometimes up to 80 percent) will be paid back – less any claims paid – after the insurance has been in force for 10 years. Owners of small businesses who select disability income insurance could have business overhead expense coverage that will help pay business costs including rent, utilities and interest on business loans.

Disability income insurance also provides some benefits that are intangible, but still very important. Your most important reason for purchasing disability income insurance could be the “peace of mind” that comes with knowing that bills will be paid in the event of a disabling illness or injury.

And don’t underestimate the boost in confidence and sense of self-worth that comes from providing for your family even though you’re experiencing a disability.

Grant M. Barra, LUTCF, CLF®
Connect with me at www.linkedin.com/in/gbarra

Life Insurance Essential in Estate Planning by Grant Barra

You need estate planning. It doesn't matter how much you make. It doesn't matter where you work. What matters is whether you want to decide where your assets - no matter how great or small - end up after you die. Or would you rather have someone else make those decisions?

Estate planning is how you make sure that your assets - your lifetime accumulations - pass to your heirs in a manner of your design. It's how you make sure your family is secure, and your assets end up where you want them. It's taking care of your family, your business - whatever is important to you.

Proper estate planning, whether through a will or some other vehicle, will make sure you, and not the state, decide where and how your assets are distributed after your death. Life insurance can give you options that make your planning an easier process. There are two basic ways in which life insurance can assist in your estate planning:
1. Estate Enhancement - primarily for younger families and those families with children. Adequate life coverage that protects a family from financial loss due to a premature loss of life can help pay for future college tuition, mortgage payments, medical bills, etc. Tax-free life benefits can help the surviving spouse and children maintain their standard of living.
2. Estate Liquidity - primarily for older folks with somewhat larger estates. Those individuals who are worried about federal and state death taxes can use life insurance proceeds to help pay those taxes. Many times, people with significant assets have those assets in "hard" form - they are hard assets, meaning that they are not easily or quickly sold. Your home, jewelry, artwork, cars and other material possessions are some examples. If those assets must be sold quickly to pay taxes that are due a few months after death, chances are you are not going to get top dollar for those assets. Life policy can remove that concern.

There are more advanced uses of life insurance, many of which are geared toward business owners. Some of those examples follow:
• Estate Equalization for Family-Owned Businesses - Family businesses operated by parents with one or more children are often in need of liquidity when the parents die, as a majority of the estate is "tied up" in the business. A Life policy provides a way to pass the business to interested heirs while being fair to those children outside the business.
• Buy-Sell Funding - Life coverage can be an indispensable tool enabling surviving co-owners of a business to own and continue the business without outside intrusion, while the deceased owner's heirs obtain debt-free assets from the estate.
• Key-Person - Business owners use "key-person" policies to help replace earnings associated with the loss of employees whose unique talents and knowledge made them valuable assets of the business.
• Credit Enhancement - Life insurance is often used to stabilize a business concern's financial position and serves as a valuable asset to pledge as collateral.
• Informal Funding for Deferred Compensation - An important ingredient in any deferred compensation plan that is "non-qualified" is life insurance. Such policies owned by and payable to the employer remain a primary building-block of all such plans.

For more information on how life insurance can play a valuable role in your estate planning, be sure to visit with your financial advisor.

Grant M. Barra, LUTCF, CLF®
Connect with me at www.linkedin.com/in/gbarra