What You Should Save By 35, 45, and 55 To Be On Target

Getting started is half the battle when it comes to building retirement security. Setting near term goals are important too. Here’s how to do both.

Financial rules of thumb are just that. If you follow them, you have the satisfaction of knowing that you’ve taken action — but they do not guarantee you’ll get the results you desire. Still, in the savings game guideposts can be especially useful. A near-term target will help you get started, and that’s half the battle.

Here is a recently put together, age-based savings guideline with a range of savings goals that can be applicable to anyone.

Here are the guideposts:

  • At age 35, you should have saved an amount equal to your annual salary.
  • At age 45, you should have saved three times your annual salary.
  • At 55, you should have five times your salary.
  • When you retire at age 67, you should have eight times your annual pay.

There are benchmarks to hit along the way. Having near-term targets helps you stay on track—and take the necessary steps to catch up while time is on your side. But there is nothing easy about hitting these targets. It is assumed that:

  • You begin saving in a workplace retirement plan, such as a 401(k), at age 25. You save continuously and without interruption until age 67.
  • You start by making an annual salary contribution equal to 6% of pay, and raise the figure by one percentage point each year until you are saving 12% of your pay.
  • Your employer matches you at 50 cents on the dollar up to 6% of your pay and your portfolio grows 5.5% a year.
  • Social Security is factored in.
  • Your income grows 1.5 percentage points faster than inflation each year.

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These assumptions are reasonable in terms of building an illustrative savings model. But consider that almost no one starts saving at 25 and millions suffer some sort of job interruption over an approximate 42-year career. This model also has you saving 12% of your pay by age 32. A common rule of thumb is 10% and again, most folks don’t get serious about saving until they are in their 40s and 50s.

Meanwhile, you will need a healthy slug of stocks to earn 5.5% a year. Yet individuals have been net sellers of stock mutual funds for at least half a decade. Whether Social Security will be available when you retire is an open question. In some cases many people are not earning as much as they used to earn, and not keeping up with the rate of inflation.

Of course, it would be a mistake to extrapolate the experience of the crisis years indefinitely into the future. Still, this exercise points up the difficulty of reaching retirement security without an early start, or hyper-aggressive saving at midlife. No matter your age, at least now you can see where you stand – and what to do about it.

Contact the First Financial’s Investment and Retirement Center if you would like to set up a no-cost consultation at 732.312.1500 or visit our website for more information.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Article Source: http://moneyland.time.com/2012/09/21/what-you-should-save-by-35-45-and-55-to-be-on-target/#ixzz29fOYAuY7

What Do You Really Know About Social Security?

Many consumers are left scratching their heads wondering what’s happening with Social Security. Most importantly, will it be there when you need it?

Unfortunately, we don’t have a crystal ball that accurately predicts the future, so all we can do is learn where the program is now and hope for the best in the future.

For most Americans, Social Security is an integral part of their retirement plan. Sadly, for just as many, it is their only retirement plan.

Let’s review. Depending upon when you plan to retire, there are some important options to consider:

  • At this time, approximately 75% of retirees receive reduced benefits1.
  • A majority of workers don’t recall getting a Social Security statement detailing their benefits1.
  • Only one-third of potential retirees have reviewed their benefits with a financial planner to determine where they will need to supplement their retirement income1.

Considering the fact that many Americans will rely on their Social Security, these are sobering statistics indeed!

The income you receive from Social Security varies depending upon the age you retire and your marital status. It’s a good idea for spouses to coordinate their retirement strategies to ensure they enjoy a good quality of life post-retirement.

The Investment and Retirement Center located at First Financial Federal Credit Union can work with you to help you better understand what your options are and how to prepare to get the most out of your retirement years. Remember, knowledge is power!

For additional information about your Social Security and retirement, please visit the Investment and Retirement Center at First Financial or call to set up a no-cost consultation at 732.312.1500.  You can also visit our website for more information.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. FR091225-2315

Article Source: http://www.socialsecurity.gov/

Retirement Healthcare Planning in an Uncertain Environment

These days people are living longer than ever – and we’re all for that! But living longer does come with a tricky problem: The longer you live, the more likely you are to require extensive (and expensive) health care services. That means you’re incurring the highest healthcare costs during the part of your life when you’re not working – so you’d better have excellent insurance, good retirement income or both.

No one who plans to live long can escape the necessity of at least preparing for health care costs during their golden years. Even if you never need anything besides prescription medication, it will take a serious bite out of your retirement income.

How to prepare?

Obviously, Medicare makes a big difference, and the addition of Medicare Part D a few years ago expands coverage of prescription drugs, just as the emergence of generics has reduced the cost somewhat. But planning for what could be decades of escalating healthcare costs can’t assume the best-case scenario. At the same time, it’s hard to do long-term planning when no one knows what the law is going to be. If the health care reform passed in 2010 takes full effect as scheduled in 2014, the overall health insurance pool will look quite a bit different, but Medicare is set to remain largely the same – although money has been diverted from Medicare to pay for expanded coverage. It’s hard to predict the effect of that.

If this year’s election results in the law’s repeal, it’s difficult to say what will come in its place. One plan would leave Medicare unchanged for those 55 and over but go to subsidized insurance premiums for many of those who will be eligible in future years.

How do you plan when you don’t know what’s going to happen? The best approach is to plan for what you do know. It’s reasonable to assume that a percentage of your retirement income will be eaten up by healthcare costs, including nursing home costs in later years. So as you budget for your living expenses during retirement, put aside a reasonable percentage to keep available for health care expenses. If you don’t need to spend all of it – great. Roll it over. But never stop putting aside that percentage, because you have no idea what will happen with your health as you age, so you can never assume that this year’s light health care spending will be followed by more of the same.

Planning for the worst case scenario is the best approach. Wherever the law goes, at best you stay prepared.

To get more information on planning for your retirement, contact First Financial’s Investment and Retirement Center at 732.312.1500.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. FR081220-218B

In Case of the Unthinkable, Are Your Assets Going to the Right Place?

Many people ask us what would happen to their accounts in the event of their deaths, and while no one wants to think about it, it’s a situation for which it only makes sense to be prepared.

And in truth, many people are not.

IRAs, annuities, life insurance policies and qualified retirement accounts are set up with specific beneficiaries named. Usually there is also a secondary beneficiary named, who would receive the asset in the event the primary beneficiary is deceased.

Usually, when people name their designated beneficiaries, they still have many more years to live. Sometimes situations change in their lives. For instance, if a woman names her husband as her primary beneficiary on an account, then gets divorced some time later, she may not know that her ex-husband is still entitled to those assets upon her death unless she changes her beneficiary designation.

Most people will remember to change their wills upon such an occurrence, but it’s not uncommon that they would overlook similar changes to financial accounts. In fact, many people would be surprised to know that beneficiary designations on financial accounts tend to override wills. That means if your will says your son gets your savings, but the account designates your ex-husband, your ex-husband likely has the legitimate legal claim to the money.

It’s a good idea to double-check with your financial institution and make sure your beneficiary designations are what you want them to be. It’s a fairly simple process, but no one can do it for you once you’ve passed away.

Have questions about setting up your beneficiaries or you’d like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union? Contact us.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondepositinvestment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. FR071205-11F9

Planning How Much You’ll Need for Retirement

If you are actively planning for your retirement – good going.  More people should. But as you plan, do you have a clear sense of how much money you’ll need to retire?  In this month’s Planning for Your Financial Future column, we’re urging you to think about how much you’ll need when the time comes for you to retire.

It’s been said that as a rule of thumb, you’ll need 70% of your end salary to live comfortably in retirement — that’s not necessarily true for everyone.  People often underestimate what they will need to sustain their lifestyle and handle both short and long term expenses – especially those related to medical care.

Life changing events such as marriage, having a family, planning for your retirement, potential healthcare costs, and the like, are bound to arise in your life – so you need to prepare for them as best as you can.

None of this is reason to panic.  It just means you need to plan wisely, especially if you are under the age of 50.  You may come from a family with good genes, where people routinely live well into their 80’s or even longer.  That’s great – but just understand what you’ll need in order to remain independent throughout those years.

To get more information on planning for your retirement, contact First Financial’s Investment and Retirement Center to set up a no-cost consultation at 732.312.1500 or visit our website for more information.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC , a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. FR051231-175F

Income Annuities for Retirement

PLANNING FOR YOUR FINANCIAL FUTURE

As options for retirement, you have both income and income annuities.

One job that annuities have is to make sure money is coming in during retirement. Many people have social security or a pension, but it can be a good idea to turn some of your savings into payment that will pay you for the rest of your life. This is known as an income annuity and provides lifetime income guaranteed by an insurance company.

There can be advantages to having an income annuity. If you just keep your income in a savings account and draw money out of it, there is a chance that you will outlive your savings and run out of money. An annuity can guarantee your income for life, regardless of how long you live.

How to go about setting up an annuity:
A great time to set up an annuity is before you retire so that you can give it a chance to grow. This is called a deferred annuity. One good rule of thumb can be to open one between five to ten years prior to your planned retirement.

How do I know if an annuity is right for me?
Some factors to consider when deciding if an annuity is right for you is the combination of your life expectancy, amount of savings and income amount.

Annuity Payments and Types:
There are various types of annuities and different payout options you can choose –

Income annuity with Life Payout – This gives you the highest cash flow/payout and a lifetime income. If you die prior to using all of your cash, payments stop and there is no refund.

Fixed annuity with fixed or refund payments – This annuity offers a fixed rate and no market exposure. If you die prior to using all of your cash, your beneficiary receives the rest.

Variable annuity – This annuity, like all annuities, is a long term investment and the accumulation is based on the performance of investment options.

Annuities are typically paid monthly and are lower for women than for men. Women have a longer life expectancy so the payout is longer and as a result, lower.

There are also options to get an annuity in which your income is guaranteed for your lifetime with a minimum number of payments. For example, if you get an annuity with a payment guarantee of ten years and you die within three years, your beneficiary would receive the rest of your guaranteed payments. There is also a lower payout for this annuity.

First Financial offers annuities and acts as a broker for many different companies. Have questions about investing or you’d like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union? Call 732.312.1500. You can also obtain more information on our website at FIRSTFFCU.COM, under the Investment & Retirement tab.

All guarantees are based on the claims-paying ability of the underwriting insurance company. Withdrawals before age 59 1/ 2 may be subject to a 10% federal tax penalty.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution.  CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. FR111123-F058.