We are now halfway through 2009. If you do not max-out your 401(k), 403(b) or other employer-sponsored retirement plans with the maximum contribution this halfway point in the year is good time to increase your contribution percentage to get you further towards that goal. Slowly increasing this by 1 or-3% of your pay one or two times a year will ease the decrease in take home pay so that you can easily adjust. This prevents abandoning increased contributions in the future.

Remember those that reach their retirement savings goals have a plan or a process to get there. If you are hesitant, then I suggest looking at the facts. Here is a great 401(k) online contribution calculator.  This should be utilized so you understand what the actual amount that will be taken out of your take home pay. Since 401(k) contributions are taken out of your pay before income tax is calculated, then you lower the amount of income on which you will be taxed. Fewer taxes will be taken out. The end result is that the extra 1% contribution, will decrease your take home pay by less than 1%. Look at it as your contribution is “on sale” just like your favorite brand of jeans.

Other times to increase your contribution until you are reaching the maximum include:

  • January 1
  • Your birthday
  • Date your raise becomes effective

Be sure to check with your employer-sponsored plan to see if you can enroll in an automatic increase program that will increase your contribution percentage for you. Life is busy and many of us will not remember to increase that percentage. These options automate the process of increasing your retirement savings for you! Send me a quick email at if you have any questions.


Reading through the Wall Street Journal I found an article that helps keep things in perspective during this time of economic turmoil, career stress and job loss.  I believe a lot of misery poker is happening in these key areas. Check it out and see if you play misery poker. It will help your cultural knowledge as well, turns out it is a common term on college campuses.  (Who knew? I’m behind on these things, just happy I can navigate my iPod and iTunes)

Maybe it will and maybe it won’t. Let’s consider why organizations eliminated or reduced 401(k) matching contributions.

A poor economic climate reduced revenues, which led to a reduction in expenses. To your company the 401(k) match is an expense. As companies learn to run leaner it will be difficult to bring back an expense. Until employers are competing for employees again, I do not believe this will be an area of focus for most organizations.

I truly believe that companies will have all intended to bring back the 401(k) match. In reality, my prediction is many will bring it back when the economy has full recovered, but it will be smaller than before. While the match may seem small, how your company deals with employee retirement plans has a huge impact on your overall financial plan.

Here is how one Fortune 50 company has evolved it’s employee retirement options over the last decade. Imagine that 10 years ago your employer had a defined benefit pension plan when you joined. You knew then it was a great retirement benefit. Then they switched to a cash balance plan with a full 6% match on the 401(k). You are disappointed, but the full 6% match is one of the best out there, so you are still feeling pretty good. Tough times this year and the company has gone to a variable match up to 4%, dependent on company performance. Bad year, you get 0%. The challenge a number of people within 15 years of retirement face is that the pension they thought they would have is gone and if you knew that 10 years ago you might have saved differently.

You could be in a place where retirement savings need to be ramped up to hit your goals. Action Item: Sit and figure out how the changes in your employer sponsored retirement plans impact your financial plan and retirement goals. Make savings adjustments now so you get there faster.

New rule moving forward – Save more and expect less from your company.

Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated

Your 401k match is gone. Now What?
Did you receive a company wide email lately that went something like this:
In these tough economic we are looking to remain as efficient and lean an organization as possible, without elimination of additional positions. The company’s 401(k) matching contribution will be suspended until business improves…
As an employee what are you going to say? Of course you’ll be thankful to have your job vs. 401(k)match.
It is no secret companies are cutting expenses drastically to stay open and keep employees. The 401(k) match is a big target. The wave of reductions and eliminations in matching contributions started as a domino effect. Small companies it has happened more quickly. Once one large company took a swipe at the matching contribution, it was easier for other’s to follow. Shareholders like the message that everyone in the company is making a sacrifice in order to save talented employees and reduce expenses.
While this may seem like a minor change, it should be addressed as part of your financial plan. Questions to ask yourself:
  • Do you need your 401(k) to be your automatic savings mechanism? (Are you a disciplined saver or would you spend it?)
  • If your putting less than $6,000 into your 401(k) is it your best option?
  • What is your tax benefit? Do you need the income tax savings?
  • How close are you to reaching retirement/financial independence?
 First, if you are not a disciplined saver keep the 401(k) so you keep up the automatic saving. To slowly increasing your savings put a reminder on your calendar to increase your contribution 1% on your birthday. (Stop reading now if you are not a good saver.)
If you are putting away less than $6,000 and don’t see this amount increasing much, then a regular IRA may be a better option for several reasons.
  • More investment options. Most 401(k) programs have a set number of funds to which you are limited. An IRA significantly expands your pool of available investments and mutual funds. This provides better access to great money managers, potentially giving you a significant advantage over your 401(k).
  • IRA contributors have 15 1/2 months to make a contribution for the calendar year. For example in 2009, you can make contributions to an IRA from January 1, 2009 – April 15, 2010.
  • You will have the same income tax benefit in your IRA as your 401(k) if you contribute less than $6,000, as your contribution is not taxable income. (Your withdrawals will be taxable.)
Let’s not forget about the Roth IRA. If you are not a fan of taxes and believe that when you retire either your tax bracket will be higher and/or in general taxes will be higher this may be another option. The Roth IRA is paid with after-tax dollars today and all withdrawals are tax free, as you will not be taxed on the growth of the account upon withdrawal.
First check if you qualify for a Roth IRA account in 2009.
Married combined modified adjusted gross income (MAGI) must be below $166,000. This phases out between $166,000 and $176,000. $176,000 or more and you are ineligible.
Individual MAGI must be below $105,000. This phases out between $105,000 and $120,000. More than $120,000 is ineligible.
If your eligible for the Roth IRA you have a few options.
  • Save in your 401(k) or IRA to receive a tax benefit today and fully fund a Roth IRA account for $5,000 (50+ $6,000) for tax free withdrawals later. Win today and in the future with taxes.
  • If you only save $5,000 or less you can decide to save taxes today via your 401(k) or IRA, or pay the taxes today and have not tax worries when it comes time for withdrawing in retirement.
This is a lot to think about. You must take the time to understanding how your 401(k) match being gone can impact your savings mechanisms for retirement and your overall financial plan. One small email from the big boss can change a lot.
Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated
  • Who would you like to have the wealth built over your lifetime – Your spouse, family or nursing home?
  • Do you want to preserve significant assets for your family legacy or charitable giving?
  • Do you want to ensure your spouse is well taken care of should you die first?

Long Term Care Insurance may be an important part of your overall financial and estate plans.

 If you are between the ages of 40 and 80, you need to think about long term care insurance. Especially if you have a family history of Alzheimer’s disease.

Medicaid will cover me is a common thought process of those approaching retirement. Medicaid requires full financial disclosure of assets and has many rules about transferring assets. While the eligibility requirements vary from state-to-state most allow individuals to retain $2,000 in assets and married couples $3,000. A spouse is allowed generally to keep half the combined assets, with a maximum of just over $99,000 in 2006. You are enabled to pay for burial expenses, debt insurances, etc.

Read between the lines on this one, if you or your parents have sizeable assets Medicaid will most likely not be an option. Medicaid was designed to help people with no money. Estate and insurance planning is where your focus needs to be.

If you have trouble falling asleep tonight read up on Medicaid.

U.S. Department of Health and Human Services states that approximately 70 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime. Over 40 percent will need care in a nursing home for some period of time.

The U.S. Department of Health and Human Services calculated the average long-term care costs in 2008 were the following.  

  • $187/day for a semi-private room in a nursing home
  • $209/day for a private room in a nursing home
  • $3,008/month for care in an Assisted Living Facility (for a one-bedroom unit)
  • $29/hour for a Home Health Aide
  • $18/hour for a Homemaker services
  • $59/day for care in an Adult Day Health Care Center

Check out this page to see what the costs are in your area.

Using these numbers for a guideline it costs over $76,000 a year for a private room in a nursing home. If you live in a more expensive area of the country it could cost you upwards of $129,000 a year in New York City, $90,000 in Miami or $82,000 in San Diego. Running the math you can see that a $500,000 or $1 million portfolio can be eaten up very quickly.

Using $76,000 as the cost a $500,000 portfolio can be exhausted in just 6.5 years, while $1 million will be gone in 13 years. When you consider that both spouses may need care that isn’t very long. One of the first things individuals say is that Long Term Care Insurance is expensive. It is expensive if you look at the premium amount. Considering the cost of care carving out a small percentage of the portfolio to protect the remainder is a good idea.

Long Term Care Insurance comes in many flavors and options. I can take you through these; contact me today for brief phone meeting on Long Term Care Insurance.

Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated. 

It is hard to attend any function whether a school play or cocktail party without running into someone who has lost their job or worried about losing their job. Reducing financial and emotional stress will assist your family in getting through the situation.

Financial Preparation

  • Assess spending
  • Develop monthly cash flow and budget for a potential layoff situation.
  • Increase emergency reserves
  • Determine where to rollover your 401(k)

Professional Preparation

Gather your data

  • Ensure you have examples of your major accomplishments.
  • Have the numbers behind your accomplishments for resume, such as years of growth, revenue and growth percentages.
  • Understand your company and unemployment benefits.

Arm yourself for the search

  • Start your resume now!
  • Contact a resume writer or use online service (
  • Take advantage of every outplacement service you are offered.
  • Line up references.
  • Network, network, network
  • Call former managers; let them know you are looking.
  • Find your cheerleaders!

Networking 101

  • Get comfortable speaking about your job situation. Being able to easily discuss your situation and briefly tell someone what you are looking for will be a key to success.
  • Be as positive as possible in all social situations so contacts will want to help you.
  • Utilize networking tools such as In to keep track of contacts.
  • Print business cards for job search (Available free at, you just pay shipping )

New job – Financial Recovery & Success

  • Maximize 401(k) contribution to boost savings and reduce taxes.
  • Establish/re-establish emergency fund
  • Utilize new budget and cost-cutting skills to determine sustainable lifestyle expense.
  • New savings can be invested.

Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated.