Because every situation is unique, certain assumptions have to be made. The authors assume an income replacement rate of 80% which is a reasonable number. However, one’s indivual required income replacement percentage will vary based on actual savings rates: if one is saving 25% of their income the replacement rate may only be 75%, at the high end. One also has to consider debt. If a mortgage is going to be paid off before retirement, the replacement percentage will be lower.

The authors consider Social Security retirement benefits too. They look  at low, medium and high income earners separately because Social Security will replace less of a higher income worker’s income than it will for a lower income earner. By subtracting the percentage of income that the Social Security benefit will replace from the suggested 80%, the percentage of  income that one’s retirement savings must cover is revealed.

Most people are familiar with the “miracle of compounding” and the dramatic effect that starting to save early can have on the size of one’s retirement nestegg. However, many have chosen to kick the can down the road and put off saving for retirement. The tables in the paper reveal the dramatic percentage increase that is required to make up for this lost time.

Even more frightening, are the impossible percentages of income that one would have to save if they started saving late combined with the desire to retire early. Take a look at those numbers in the brief. “Impossible” is not an exaggeration for the vast majority of the populace. However, good news is revealed by the fact that by working longer: think age 70+, one can make up for lost time and the required percentage of savings decreases to a much more manageable number.

I have one major caution regarding neglecting the start of retirement savings by planning to work longer. What if health issues derail that plan? The health issues may be such that one will still live for a good number of years but working full-time may not be feasible.

The best plan is to start young. If one has the ability to positively influence a young person regarding saving for retirement, they should do it. It may be the best gift a young person may ever receive. If however, a reader  is behind and has neglected his or her own retirement savings, they should get their cash flow under control in order to start saving for retirement as aggressively as possible. Do not count on being able to make up for lost time late in life.

The link to the brief is: http://crr.bc.edu/briefs/how_much_to_save_for_a_secure_retirement.html 

This is intended to be educational. Please consult your financial advisor for advice that is specific for your situation.

This is a dangerous day in the stock markets: but not the way you might think. For those of you that are investing for long term goals like your retirement, this day could be dangerous because it might scare you. The danger mainly lies in the possibility that you might become scared enough to sell out of your stock ETFs or stock mutual funds!

If you’ve held your funds through this drop, dumping them now is probably a bad idea. Many, otherwise, rational people tend not to hold onto this rationality where investing is concerned. They buy when the market is high and their friends are giddy with the recent advances in the market, then they sell when the market drops.

Think about this for a minute! How do you buy and sell other things in your life? The rational crowd buys when things are on sale (think: drop in the price – I should buy now!), and sell when you can make a killing (think: stocks have really gone up in price - I can make a mint by rebalancing my portfolio now!).

 This isn’t original thinking on my part. The great Warren Buffet says it best. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” In other words, he buys low and sells high.

If you have additional money to invest and it fits with your investment or financial plan, you should think about buying now. If you’re not sure if this is the bottom and you have a big lump sum to invest, for your comfort, you could dollar cost average by buying once a month or quarter.

I just took a peek at a few of my clients’ portfolio values and was pleased that diversification is working exactly like it should. Yes, they’ve lost some money but the bond portion of the portfolio has gone up in value and is making this ride a little less frightening. Besides, they understand that the stock portion of their portfolios are invested for a longer term. This isn’t money that they’ll need to access for the next several years.

Could the market drop more tomorrow? Yes it could. Could it rise tomorrow with some good news? Yes it could. This post is not for short-term speculators. I don’t pretend to see the future. I do understand how the markets have worked over the past century. My advice is to keep a cool head and get some sleep tonight.

This is not financial advice because only you and your financial advisor are familiar with your situation. This is merely for educational purposes.

• First and foremost, the applicant must be a Fee-Only financial planner. The planner may not derive any compensation from commissions, referral fees or soft-dollar arrangements.
• The applicant must submit a Comprehensive Financial Plan to NAPFA for Peer Review. 
• The applicant must sign and abide by a Fiduciary Oath* that pledges to “exercise his/her best efforts to act in good faith and in the best interests of the client”.
• All members admitted to NAPFA after January 1, 2010 must have passed the Certified Financial Planner(R) exam.
• All members must have a Bachelor’s degree in any discipline from an accredited institution.
• All admitted members must commit to a significant reqirement of 60 hours of Continuing Education for each 2 calendar year period.

As a member of the Garrett Planning Network, William has always been committed to providing fee-only financial planning to his clients. He feels that being admitted to NAPFA is a logical, next step in his desire to act as a fiduciary for his clients. 

If you would like to learn more about NAPFA, visit the organization’s website at www.NAPFA.org

* Contact info@DuncanFinancialPlanning.com for the full text of the Fiduciary Oath.

In Toby’s defense, I’m lifting these particular lyrics totally out of context. “Cuz if you don’t know where you’re goin’, You might end up somewhere else.”  Even though my use of these lyrics doesn’t go with the rest of the song, I think Toby might approve. When you’re as successful as he is, it usually isn’t an accident. It might start out as a dream, then it becomes a goal, actions, more actions, adjust as you go along: finally success!

These lyrics ring true in any type of goal planning and especially with financial planning. If you don’t know where you’re going: you might end up somewhere else. By examining what you want and where you want to end up, setting goals, setting the plan into action and making adjustments as needed: you have a fantastic chance of realizing your goals. Heed Toby’s words, don’t leave it to chance. Cuz you might not like somewhere else.

We will look at the stability of Social Security, how much you can expect to receive, at what age you should apply and some strategies for maximizing your benefit.

Attend a free workshop on the following Dates:

• Wednesday May 18, 2011 at 2pm
• Thursday June 16, 2011 at 2pm
• Thursday July 21, 2011 at 2pm
• Saturday August 20, 2011 at 2pm
• Monday September 19, 2011 at 2pm

Each session will last approximately 1 – 1.5 hours and will include Q & A.

Space is limited to 12 persons per event. Save your seat today!

Contact William@DuncanFinancialPlanning.com or call 702.492.4926 to register. Leave the name of each attendee you are registering, your telephone number and your email address for confirmation purposes.

If any of you aren’t sure about what I can do for you and how the fee-only financial planning process works, this may help: I work like a personal trainer does, except I work on your fiscal fitness! The analogy isn’t original and it is a little simplistic but it does make sense.

Just like a personal trainer:

• We have to do an assessment. What kind of shape are you in now? This isn’t to judge you, it’s to be sure that the eventual plan of attack will be appropriate for you.
• What are your goals? This is a good exercise because it forces you to make some concrete decisions. What goals do you have? Do you want to pay for your childrens’ education? When do you want to retire? How much do you need to save to meet those goals?
• Next we create a workable plan to meet your goals. Are your goals realistic? Imagine that you want the fiscal equivalent of turning a 90 lb. body into Mr. or Miss Olympia by the end of the first year. We can move in that direction, but part of my job will be to help you modify your goal and figure out what is obtainable.
• After your fiscal fitness plan is developed, we discuss it and I put you to work! Although I can help you in certain aspects of implementing the plan, the ultimate determination of success is your willingness to commit to it. If you can’t commit to it, I need to modify the plan or help motivate you.
• After you’re motivated and working on the plan, you will come back for occasional check ups to be sure that you’re on target. You’ll also come in any time you have a major event in your life that would cause a plan to change.

Can you picture the process? I don’t sell products to you. I don’t make any commission. You pay me to partner with you to ensure that you are positioning yourself and family for fiscal success. The overall process includes:

• Assessing your current cashflow situation and the impact that the proposed changes will have on it. This is done with a budget that may or may not have to be very strict depending on your current situation. It is mainly used as an assessment tool and guideline. We also look at any savings and investments that you already have and we measure your net worth.
• We measure your risk tolerance. This, along with other factors help determine how conservatively or aggressively you should invest your money to meet your goals. Since it’s your money, I think you should be comfortable enough with the plan that you never lose a night’s sleep over it.
• We discuss your goals and run calculations to see whether you need to make adjustments to your savings rate to be able to meet those goals.
• We design an investment program that considers all of the information that we’ve gathered in the previous steps to give you a realistic chance to meet your goals. Tax efficiency will be taken into account during this step.
• Events sometimes happen in life that can throw us off course if we aren’t protected. We consider all of your insurance coverage and make recommendations that will help you stay on course even if the unexpected does happen.
• The same holds true with estate planning. We will give general recommendations for needed legal documents that will protect you or your loved ones in the event of incapacity or death.

As you can see, although investments are part of the picture, these are to be used as a means to the end. Your financial health, meeting your life goals and the comfort and security of you and your loved ones is what this is really about.

If you need help whipping your fiscal self into shape: contact me or another Garrett Planning Network financial advisor. William@DuncanFinancialPlanning.com