Richard London CFP

January 2016 Newsletter

The Savvy Female Saver

female-saverWomen face a different challenge than their male counterparts; they are living longer and spending more time in retirement, but with less savings. Americans in general as a group face a shortfall in retirement savings, but women appear to be saving less than men (Employee Benefit Research Institute 2015 study). Why the shortfall? There is still a pay gap and women may face career interruptions due to raising children or taking care of family. Women also tend to save less during their earning years compared to men, regardless of pay. Here are some ‘savvy savings’ ideas to help ensure you have enough in retirement:

Take Responsibility for your financial security. Regardless if you’re in a relationship or not, your longevity statistics prove you should be in control of your savings. Don’t rely on someone else’s savings to coast you through retirement.

Coordinate Retirement contributions with your spouse or partner. If you have times you are unemployed and not saving, have your spouse contribute to a spousal IRA on your behalf.

Plan for long term care. Because women statistically live longer, you are likely to need care and without insurance to cover that cost, your assets will quickly become depleted.

Save more than the norm. Saving 5%, even 10% of you pay may not be enough. Have a financial plan done on you alone, aside from you as a couple to see what your amount saved would need to be to last you through age 98.

Remember to be aggressive in your savings and planning. Once retired, remember your investments still need to outperform inflation and make money.

Your New Year’s Resolutions

new-yearMany of us make resolutions for the New Year, some which may include losing weight and exercising. In fact, membership at fitness clubs tends to go up each January! Many people make New Year resolutions regarding their finances as well.

Here are resolutions that I feel will impact you in a positive way this upcoming year:

  • Spend Less and Save More
  • Pay down debt
  • Set aside money for an emergency
  • Have a budget and stick to it
  •  Save more for retirement by investing in various types of investments that are relevant to your situation.
  • Save for your child’s or grandchild’s education
  • Learn more about financial topics and financial security- Education is key!

All of these and others are excellent objectives. The key is to go from having a goal to implementing the steps needed to achieve that goal.

Is saving for education a goal? Vehicles like a 529 plan can be an excellent way to save for college. Every state has a plan and you aren’t confined to investing in only your state’s plan.

Are you looking to save more for retirement? Do you know how much you might need to accumulate to retire in comfort? Perhaps this is the year to get a financial plan in place. A properly constructed financial plan can be your roadmap to achieving your financial goals and achieving the life you want for yourself and your family.

Contact me to schedule a time to meet to see how I can help you towards your New Year’s goals. Make this the year that you transform your financial New Year’s resolutions from ‘good intentions’ into an ‘action plan’.

Rising Interest Rates and Stock Prices

interest-ratesOn December 16, 2015 the Fed announced an interest rate hike, which will end interest rates at near zero since 2008. While an increase in interest rates may have a negative initial impact on bonds and bond mutual funds, what will the impact be on stock prices and the mutual funds that invest in stocks? Certainly nobody can predict what will happen in the stock market. Many factors other than interest rates impact stock prices.

The near-term impact of a rate increase is hard to gauge. There will likely be some initial market volatility. Some sectors will continue to do well while some interest rate sensitive sectors could be hurt.

Over the longer-term stocks have proven to be solid hedge against inflation and interest rate increases. From that perspective, stock investors shouldn’t worry too much about interest rate hikes in the short-term, and stay focused on stocks as a long-term investment.

One potential impact as interest rates rise, is that bonds may become more attractive, driving some money from the stock market to bonds. In the short-term this may reduce stock prices.

The future is hard to predict. It makes sense to position your investments to provide you with the potential long-term returns you need at a level of risk that you can tolerate. I look forward to reviewing your investments and helping you be properly positioned for whatever may come next.

Investing Tips for Under Age 40

investing-tipsYounger investors have an advantage over the rest of us. Their youth gives them a long-time horizon to accumulate wealth for retirement and other financial goals. Here are a few investing tips for those under 40:

Start early. If your employer provides a 401(k) or a similar retirement plan be sure to contribute to it as soon as you are eligible. Be sure to invest at least enough to earn the full match provided by your company if one is offered.

Invest aggressively. You have a long time to invest and the stock market will experience many ‘ups and downs’ over your working life. Take advantage of your long time frame and focus on consistent growth.

Don’t withdraw money from your 401(k) account if you switch jobs. You will be subject to taxes and penalties. Roll the money to an IRA or a new employer’s retirement plan.

Read and become knowledgeable about investing and personal finance. Even if you work with a financial advisor, ultimately you are responsible for your own financial success.

If you would like some guidance and a second opinion about your financial situation, please contact me. I look forward to helping you ensure you are headed in the right direction.

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