Archive for January, 2016

“BOOMERS’ AND RETIREMENT”

January 28, 2016

“Boomers'” are facing many different problems that the generations before them.

Clashes About Retirement in Two-Career Couples.  Today’s norm of two-career couples in the boomer generation, have resulted in retirement issues becoming sticky.

Retirement today is a complex subject, rife with  issues that can’t be resolved by pushing buttons on the remote or “cookie cutter” plans that are like today’s socks…”one size fits all.”

A main reason for the complication is the  predominance of two-career couples.  Instead of adapting to one lifestyle in a household brought on by a single retirement–traditionally the  husband’s–spouses now must confront two separate retirements.  These events rarely occur at the same time, making for extended periods of  adjustments (“He Quits, She Doesn’t”).

Boomers’ Impending Financial Squeeze

Despite the prevalence of two-career couples and growth of retirement plan assets, boomers should not assume existing assets and planned investments will be sufficient to see them through their long retirement period.  It is very important that the goal of a retirement plan is make certain that the retiree does not outlive the retirement funds.

Until the advent of the individual retirement account (IRA), 401(k) plan, and profit-sharing employer plan, most retirees depended on  a steady and predictable income from  their employer-funded benefit plans.  In the 21st century, defined benefit plans have been replaced by defined contribution retirement systems so that individual employees and  self-employed persons bear the brunt of  selecting and managing their retirement investments as well as supplementing any employer-provided plans with savings and private investments.  Some supplements boomers have elected–such as inheritances and cashing out appreciated home values–may prove insufficient as well.

Amount of Savings

Much research has investigated the savings habits of boomers compared with other generations of Americans.  In addition to the traditional “threelegged stool” of Social Security, employer pensions, and private savings as retirement income sources, many believe that retirees will increasingly require a  fourth leg:  earnings.  With the wild stock market swings in  2007 through the present, those earnings may evaporate.

Ever-Later Age for Receiving Full Social Security Benefits

Although workers may start to receive Social Security benefits as early as age 62, the benefit level is significantly lower until they reach their “normal retirement age.”  (There are also changes in Social Security benefit options which become effective May 1, 2016).  Boomers born at the end of their generation (1960 or later) must wait an entire year longer–till age 67–to reach that normal retirement age and claim full Social Security benefits than do boomers born before 1955, according to the Social Security Administration (SSA).  The SSA’s website (www.socialsecurity.gov) warns workers to consider their family’s average lifespan and consider waiting to claim full benefits in case the retirees outlive other pensions or annuities.

Layoffs and salary stagnation during the Great Recession affected accumulation of  earnings that determines Social Security benefits.  Nevertheless, the SSA Office of Retirement and Disability Policy reported a drop in the share of early boomers who  were not retired as of 2010.  This was despite the statistics that 70 percent of high-wealth boomers experienced a loss of real wealth during those years.

Shaky Retirement Plan Benefits

Fewer workers today–just 21 percent–are enrolled in a defined benefit plan to which employers alone contribute.  (And even pensions can terminate.)  The majority of employees bear more investment risk in managing their own retirement dollars in an array of  mutual funds offered in 401(k) and similar defined contribution plans.  Not only must employees learn about the pros and cons of the mutual fund flavors but workers now must contribute some of their own  wages to be “matched” to some degree by their employers.  Thus, not only the risk has shifted to employees, but so has their retirement funding!

Retirement fund debacles such as Enron’s employee stock plan do little to ease workers’ concerns.  Despite the fact that reforms have improved workers’ rights in  avoiding over investments in their companies’ stock, many employees remain unable to make educated choices among retirement investment vehicles.  Even if retirement savings survive intact until an individual retires, some of  the investment decisions that arise can be daunting: 

  • Should the individual take a lump-sum payout (a safer bet if the worker doubts the long-term health of his or her employer)?
  • Should the individual roll over retirement assets into diversified investments and  assume the reins of managing those stocks, bonds, and mutual funds?
  • Should the individual convert the lump-sum retirement payout into one  of the  growing numbers of annuity types (immediate or variable, fixed or equity-indexed, with flavors such as immediate-annuities-with-IRAs and mutual funds wrapped with an  annuity)?

Burrows Financial take much of the worry and difficulty in making the difficult decisions in planning and management of your retirement funds to improve your chances of outliving those assets.  We have the knowledge and expertise of many years of experience to provide a long-term relationship with our clients.  Whether you have already retired or planning for your retirement, now is  the time to review your retirement plan and/or goals to  make the necessary “tweaks” to achieve maximum results.  Today is not the time for just patience, it is the time for action.  We are committed to your success!

http://burrowsfinancial.thebetterretirementplan.com

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Commitment:  How to Beat Your Problems (Nehemiah 4:1-5:13)

One of the great tests of leadership is  how you handle opposition.  Nehemiah faced the  usual tactics of the opposition:  ridicule, resistance, and rumor.  Nehemiah modeled the  right response to all three of  these challenges.  He…

  • Relied on  God
  • Respected the opposition
  • Reinforced his  weak points
  • Reassured the people
  • Refused to quit
  • Renewed the people’s strength continually

While Nehemiah 4 concerns problems from without, chapter 5 deals with problems from within–disputes about food, property, and taxes.

Persistence is the ultimate gauge of our  leadership; the  secret is to outlast our critics.  Nehemiah taught us this lesson by staying committed to his ultimate calling.

Have a great day!

“Principle-Centered Leadership”

January 6, 2016

John Maxwell Leadership Bible:  (Proverbs 4:20–27)

Leaders who last do not merely react to their culture; they base their leadership on timeless and universal principles. They remain relevant because they marry cultural context to timeless truth. Proverbs 4 encourages leaders to become principle centered. Verses 20–27 teach us that God’s principles give us three crucial tools:

1. They are a guide; they help us stay on the right path.

2. They are a guard; they keep our hearts and bodies protected.

3. They are a gauge; they enable us to evaluate where we are.

These principles build our character, direct our decisions, and correct our lifestyles. Every leader ought to consume God’s Word, then put the truths he or she discovers in the form of principles that can guide, guard, and gauge his or her life.

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As a financial advisor I strive to base my relationship with clients on timeless and universal principles.  When dealing with my clients’ retirement and savings assets, each decision is based on guide, guard, and gauge. 

The guiding principle helps to stay on the right path to accumulating retirement funds to make sure retirement goals are met.

The guarding principle can be applied during the accumulation period in preparation for  retirement and making certain there will sufficient funds for  retirement, making sure the funds will outlive the retiree, and  having sufficient liquidity to me unforeseen needs.

The gauging principle is used for evaluating the progress of preparing for retirement, living in retirement, and providing for family.

By strictly adhering to these principles, my relationship with clients is enhanced and relieves them from the stress that can be experienced on the way to retirement and afterword.

Have a great day!

http://burrowsfinancial.thebetterretirementplan.com