Tag: roshan (page 1 of 2)

Are you ready for a long retirement?

Following is a great article on funding a long retirement:

http://www.marketwatch.com/story/how-to-fund-a-long-retirement-2017-01-10

We typically plan for our clients to live until age 100.   An interesting fact from the article, the average life expectancy for a 65-year-old male rose from 84.7 in 1950 to 87.8 in 2010 and average life expectancy for 65-year-old woman rose from 86.6 in 1950 to 89.7 in 2010.

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

Year End Tax Tips

It is time to make some year end tax planning moves.    Following is an article with some tips that I think will help most people.

https://www.yahoo.com/finance/news/5-things-to-do-by-new-years-eve-to-get-a-bigger-tax-return-185655740.html

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

Retirement Crisis

Most people find investing “complex and confusing.”   They also “don’t know what to do to prepare for retirement.”   This is what we help our clients figure out.

When planning for retirement, it is important to try to find your target.

  1. When do you want to retire?
  2. What do you want to do for retirement?
  3. How much do you need for retirement?

Following is a great article about the retirement crisis.

http://www.businessinsider.com/reasons-for-americas-retirement-crisis-2016-11

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

Early Returns: How U.S. Markets Reacted to the Presidential Election

On November 8, 2016, Republican candidate Donald J. Trump won a closely contested election for president of the United States.

Late on election night, when it became evident that Trump was likely to win despite consistently trailing in the polls, foreign markets went into a deep dive.1 Many observers expected a similar reaction when the U.S. stock market opened on November 9, but after an initial drop, the S&P 500, Dow Jones Industrial Average, and NASDAQ rose throughout the day, and all three indexes closed up more than 1%.2 Although this was unexpected after the late-night surprise, it actually continued a two-day upsurge that began when Democratic candidate Hillary Clinton was expected to win the election.3

The market was mixed but steady the following day, November 10, with the Dow again up more than 1%, a small increase in the broader S&P 500, and a moderate decline in the NASDAQ, which tends to be more volatile due to its inclusion of smaller, technology-driven companies. On November 11, the NASDAQ recovered its loss, the Dow was slightly higher, and the S&P 500 was slightly lower — not unusual after a week of rising stock prices.4

On the other hand, bond prices fell steeply the day after the election, and the yield on the benchmark 10-year Treasury note, which rises as prices fall, jumped more than 2% for the day. This, too, was a surprise because Treasuries are generally seen as a safe haven in times of uncertainty. But on the day after the election, investors were more interested in selling Treasuries than buying them.5 The Treasury sell-off continued on November 10.6 (Bond markets were closed on November 11 in honor of Veterans Day.)

The conciliatory tone of Trump’s acceptance speech, Clinton’s concession speech, and remarks by President Obama all indicate there will be an orderly transfer of power, which may have helped calm the markets. Here are some additional implications that might be drawn from the initial market reaction.

First, although the Trump presidency was unexpected and his economic policies are untested, rising stock prices suggest that investors may be optimistic that his promised pro-business agenda could help continue the upward market trend of the last few years. Investors like clarity and consistency, and the fact that the same party will control the White House and Congress might create a more productive and predictable working relationship.7 At the same time, fundamental differences between the president-elect and the Republican Congress suggest that any changes may be more measured than originally anticipated.8

Second, in this initial transition stage, money flowing out of Treasuries suggests that bond investors may see a Trump presidency as leading to higher inflation and higher interest rates due to a combination of more protective trade policies and heavier government borrowing in order to fund infrastructure spending and reduce taxes for individuals and corporations. Declining bond prices might also reflect a belief that the Federal Reserve may raise rates at its December meeting despite the political surprise.9

Of course, these are just first impressions, and there could be many market ups and downs as investors try to understand what the new president’s policies might be, how much support they may have from Congress, and how they might affect the broader economy. Moreover, government policy and political debate are only two of many factors that can create market volatility.

Is the U.S. economy strong enough to withstand any headwinds that arise from a changing administration? That remains to be seen, but fundamental economic indicators have been solid, and overreacting to political events is unwise. The most stable approach in changing times is generally to maintain a well-diversified portfolio using a strategy appropriate for your time frame, personal goals, and risk tolerance.

Diversification does not guarantee a profit or protect against investment loss. The principal value of stocks and bonds may fluctuate with market conditions. Stocks, when sold, and bonds redeemed prior to maturity may be worth more or less than their original cost. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest.

The performance of an unmanaged index is not indicative of the performance of any specific investment. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results; actual results will vary.

Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, as well as economic and political risk unique to the specific country. This may result in greater share price volatility.

1) CNNMoney, November 9, 2016

2, 5, 7) MarketWatch, November 9, 2016

3-4) Yahoo! Finance, November 11, 2016

6) MarketWatch, November 10, 2016

8) The New York Times, November 9, 2016

9) CNBC.com, November 9, 2016

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

Facebook and Your Retirement

I don’t use facebook very much, but I can understand seeing your friends on vacation would make you want to go as well.  This article looks at this situation in depth.    I really like the do’s and don’ts listed at the end of the article.    Be happy with what you have and be happy for your friends.

http://www.usatoday.com/story/money/columnist/powell/2016/11/16/retiree-facebook-travel-jealous-retirement-risk/90740868/

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

Retirement Planning Tips

There are a lot of great tips in this article.    The ability to donate money using your RMD is an opportunity a lot of retirees miss.

http://money.usnews.com/money/retirement/401ks/articles/2016-11-14/6-end-of-year-retirement-planning-tips-that-will-save-you-money

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

Fear of Spending

I frequently meet with clients that do not believe they can afford to retire.   Even after working when their financial goals show that they have more than they need.    Once they retire, they are reluctant to spend their money and it takes some time to feel comfortable spending.   Following is a great article on the subject.

http://time.com/money/4560067/retirement-fear-of-spending-budgeting-income/

If you like this article, please follow me at any of the following places:

https://twitter.com/RoshanLoungani

https://medium.com/@RoshanLoungani_85629

https://plus.google.com/117866529459426703812

http://roshanloungani.net/

IRA and Retirement Plan Limits for 2017

IRA contribution limits

The maximum amount you can contribute to a traditional IRA     or Roth IRA in 2017 is $5,500 (or 100% of your earned income, if     less), unchanged from 2016. The maximum catch-up contribution for those age     50 or older remains at $1,000. (You can contribute to both a traditional and     Roth IRA in 2017, but your total contributions can’t exceed these annual limits.)

Traditional IRA deduction limits for 2017

The income limits for determining the deductibility of     traditional IRA contributions in 2017 have increased. If your filing status is     single or head of household, you can fully deduct your IRA contribution up to $5,500 in     2017 if your MAGI is $62,000 or less (up from $61,000 in 2016). If you’re     married and filing a joint return, you can fully deduct up to $5,500 in 2017 if your     MAGI is $99,000 or less (up from $98,000 in 2016). And if you’re not covered by an employer plan but your spouse is, and you     file a joint return, you can fully deduct up to $5,500 in 2017 if your MAGI is     $186,000 or less (up from $184,000 in 2016).

If your 2017 federal income tax      filing status is: Your  IRA deduction is limited if your MAGI is      between: Your deduction is eliminated if your MAGI is:
Single or head of household $62,000 and $72,000 $72,000 or more
Married filing jointly or qualifying      widow(er)* $99,000 and $119,000 (combined) $119,000 or more      (combined)
Married filing separately $0      and $10,000 $10,000 or more

 

*If you’re not covered by an employer plan but your spouse     is, your deduction is limited if your MAGI is $186,000 to $196,000, and     eliminated if your MAGI exceeds $196,000.

Roth IRA contribution limits for 2017

The income limits for determining how much you can     contribute to a Roth IRA have also increased for 2017. If your filing status is     single or head of household, you can contribute the full $5,500 to a Roth IRA in     2017 if your MAGI is $118,000 or less (up from $117,000 in 2016). And if you’re     married and filing a joint return, you can make a full contribution in 2017 if your     MAGI is $186,000 or less (up from $184,000 in 2016). (Again, contributions     can’t exceed 100% of your earned income.)

If your 2017 federal income tax      filing status is: Your Roth IRA contribution is limited if your MAGI      is: You cannot contribute to a Roth IRA if your MAGI is:
Single or head of household More than $118,000 but less than $133,000 $133,000 or more
Married filing jointly or qualifying      widow(er) More than $186,000 but less than $196,000      (combined) $196,000 or more (combined)
Married filing separately More      than $0 but less than $10,000 $10,000 or more

 

Employer retirement plans

Most of the significant employer retirement plan limits for 2017 remain unchanged from 2016. The maximum amount you can contribute (your “elective     deferrals”) to a 401(k) plan in 2017 is $18,000. This limit also     applies to 403(b), 457(b), and SAR-SEP plans, as well as the Federal Thrift     Plan. If you’re age 50 or older,     you can also make catch-up contributions of up to $6,000 to these plans in 2017. [Special catch-up limits apply to certain participants     in 403(b) and 457(b) plans.]

If you participate in more than one retirement plan, your     total elective deferrals can’t exceed the annual limit ($18,000 in 2017 plus     any applicable catch-up contribution). Deferrals to 401(k) plans, 403(b) plans,     SIMPLE plans, and SAR-SEPs are included in this aggregate limit, but deferrals to Section     457(b) plans are not. For example, if you participate in both a 403(b) plan and     a 457(b) plan, you can defer the full dollar limit to each plan—a total of     $36,000 in 2017 (plus any catch-up contributions).

The amount you can contribute to a SIMPLE IRA or SIMPLE     401(k) plan in 2017 is $12,500, and the     catch-up limit for those age 50 or older remains at $3,000.

Plan type: Annual dollar      limit: Catch-up limit:
401(k), 403(b), governmental 457(b),      SAR-SEP, Federal Thrift Plan $18,000 $6,000
SIMPLE      plans $12,500 $3,000

 

Note: Contributions can’t exceed 100% of your     income.

The maximum amount that can be allocated to your account in     a defined contribution plan [for example, a 401(k) plan or profit-sharing plan]     in 2017 is $54,000, up from $53,000 in 2016, plus age 50 catch-up     contributions. (This includes both your contributions and your employer’s     contributions. Special rules apply if your employer sponsors more than one     retirement plan.)

Finally, the maximum amount of compensation that can be     taken into account in determining benefits for most plans in 2017 is     $270,000 (up from $265,000 in 2016), and the dollar threshold for determining     highly compensated employees (when 2017 is the look-back year) is $120,000, unchanged from 2016.

Is 70 the New 65? Why Americans Are Working Longer

Roshan Loungani is sharing a great video on retirement.   Please click on the link below:

Is 70 the New 65? Why Americans Are Working Longer

 

A Retirement Income Roadmap for Women

More women are working and taking charge of their own retirement planning than ever before. What does retirement mean to you? Do you dream of traveling? Pursuing a hobby? Volunteering your time, or starting a new career or business? Simply enjoying more time with your grandchildren? Whatever your goal, you’ll need a retirement income plan that’s designed to support the retirement lifestyle that you envision, and minimize the risk that you’ll outlive your savings.

When will you retire?

Establishing a target age is important, because when you retire will significantly affect how much you need to save. For example, if you retire early at age 55 as opposed to waiting until age 67, you’ll shorten the time you have to accumulate funds by 12 years, and you’ll increase the number of years that you’ll be living off of your retirement savings. Also consider:

  • The longer you delay retirement, the longer you can build up tax-deferred funds in your IRAs and employer-sponsored plans like 401(k)s, or accrue benefits in a traditional pension plan if you’re lucky enough to be covered by one.
  • Medicare generally doesn’t start until you’re 65. Does your employer provide post-retirement medical benefits? Are you eligible for the coverage if you retire early? Do you have health insurance coverage through your spouse’s employer? If not, you may have to look into COBRA or a private individual policy–which could be expensive.
  • You can begin receiving your Social Security retirement benefit as early as age 62. However, your benefit may be 25% to 30% less than if you waited until full retirement age. Conversely, if you delay retirement past full retirement age, you may be able to increase your Social Security retirement benefit.
  • If you work part-time during retirement, you’ll be earning money and relying less on your retirement savings, leaving more of your savings to potentially grow for the future (and you may also have access to affordable health care).
  • If you’re married, and you and your spouse are both employed and nearing retirement age, think about staggering your retirements. If one spouse is earning significantly more than the other, then it usually makes sense for that spouse to continue to work in order to maximize current income and ease the financial transition into retirement.

How long will retirement last?

We all hope to live to an old age, but a longer life means that you’ll have even more years of retirement to fund. The problem is particularly acute for women, who generally live longer than men. To guard against the risk of outliving your savings, you’ll need to estimate your life expectancy. You can use government statistics, life insurance tables, or life expectancy calculators to get a reasonable estimate of how long you’ll live. Experts base these estimates on your age, gender, race, health, lifestyle, occupation, and family history. But remember, these are just estimates. There’s no way to predict how long you’ll actually live, but with life expectancies on the rise, it’s probably best to assume you’ll live longer than you expect.

Project your retirement expenses

Once you know when your retirement will likely start, how long it may last, and the type of retirement lifestyle you want, it’s time to estimate the amount of money you’ll need to make it all happen. One of the biggest retirement planning mistakes you can make is to underestimate the amount you’ll need to save by the time you retire. It’s often repeated that you’ll need 70% to 80% of your pre-retirement income after you retire. However, the problem with this approach is that it doesn’t account for your specific situation.

Focus on your actual expenses today and think about whether they’ll stay the same, increase, decrease, or even disappear by the time you retire. While some expenses may disappear, like a mortgage or costs for commuting to and from work, other expenses, such as health care and insurance, may increase as you age. If travel or hobby activities are going to be part of your retirement, be sure to factor in these costs as well. And don’t forget to take into account the potential impact of inflation and taxes.

Identify your sources of income

Once you have an idea of your retirement income needs, your next step is to assess how prepared you (or you and your spouse) are to meet those needs. In other words, what sources of retirement income will be available to you? Your employer may offer a traditional pension that will pay you monthly benefits. In addition, you can likely count on Social Security to provide a portion of your retirement income. Other sources of retirement income may include a 401(k) or other retirement plan, IRAs, annuities, and other investments. The amount of income you receive from those sources will depend on the amount you invest, the rate of investment return, and other factors. Finally, if you plan to work during retirement, your earnings will be another source of income.

When you compare your projected expenses to your anticipated sources of retirement income, you may find that you won’t have enough income to meet your needs and goals. Closing this difference, or “gap,” is an important part of your retirement income plan. In general, if you face a shortfall, you’ll have five options: save more now, delay retirement or work during retirement, try to increase the earnings on your retirement assets, find new sources of retirement income, or plan to spend less during retirement.

Transitioning into retirement

Even after that special day comes, you’ll still have work to do. You’ll need to carefully manage your assets so that your retirement savings will last as long as you need them to.

  • Review your portfolio regularly. Traditional wisdom holds that retirees should value the safety of their principal above all else. For this reason, some people shift their investment portfolio to fixed income investments, such as bonds and money market accounts, as they enter retirement. The problem with this approach is that you’ll effectively lose purchasing power if the return on your investments doesn’t keep up with inflation. While it generally makes sense for your portfolio to become progressively more conservative as you grow older, it may be wise to consider maintaining at least a portion in growth investments.
  • Spend wisely. You want to be careful not to spend too much too soon. This can be a great temptation, particularly early in retirement. A good guideline is to make sure your annual withdrawal rate isn’t greater than 4% to 6% of your portfolio. (The appropriate percentage for you will depend on a number of factors, including the length of your payout period and your portfolio’s asset allocation.) Remember that if you whittle away your principal too quickly, you may not be able to earn enough on the remaining principal to carry you through the later years.
  • Understand your retirement plan distribution options. Most pension plans pay benefits in the form of an annuity. If you’re married, you generally must choose between a higher retirement benefit that ends when your spouse dies, or a smaller benefit that continues in whole or in part to the surviving spouse. A financial professional can help you with this difficult, but important, decision.
  • Consider which assets to use first. For many retirees, the answer is simple in theory: withdraw money from taxable accounts first, then tax-deferred accounts, and lastly, tax-free accounts. By using your tax-favored accounts last and avoiding taxes as long as possible, you’ll keep more of your retirement dollars working for you. However, this approach isn’t right for everyone. And don’t forget to plan for required distributions. You must generally begin taking minimum distributions from employer retirement plans and traditional IRAs when you reach age 70½, whether you need them or not. Plan to spend these dollars first in retirement.
  • Consider purchasing an immediate annuity. Annuities are able to offer something unique–a guaranteed income stream for the rest of your life or for the combined lives of you and your spouse (although that guarantee is subject to the claims-paying ability and financial strength of the issuer). The obvious advantage in the context of retirement income planning is that you can use an annuity to lock in a predictable annual income stream, not subject to investment risk, that you can’t outlive.*

Unfortunately, there’s no one-size-fits-all when it comes to retirement income planning. Roshan Loungani can review your circumstances, help you sort through your options, and help develop a plan that’s right for you.   Follow Roshan Loungani on twitter (https://twitter.com/roshanloungani) or Medium (https://medium.com/@RoshanLoungani_85629/about-roshan-loungani-949dd5e6875d#.c3wmjk9sx).