Yes, it is ok to look. As the end of the second financial quarter hits Wall Street it is time to see where things are at in your portfolio.  I am frequently asked “Should I even look at my investments, 401k, IRA, 529 savings plan or brokerage account?” In general, my advice has been if you don’t need it tomorrow, don’t obsess and look all the time. Instead take action where you can. This may be cutting back spending, changing investments to adjust for your new risk tolerance or saving more to makeup the gap in your account balances.  Here are my Top 10 Reasons to Sneak a Peak.

10. Admit it, you look everyday so why would today be any different?

9. Your mom told you not to look.

8. Finally you’ve made the appointment with a financial advisor and need to know where your 401(k) and IRAs are to prepare.

7. You can’t move forward with your financial plan unless you know where you are today.

6. How else will you know what to complain or brag about at the next BBQ? (Up or down, everyone is talking about the stock market.)

5. It may be time to rebalance your investment portfolio.

4. Good excuse to open that bottle of tequila or wine that you’ve been eyeing to get through the pain.

3. If your risk tolerance has changed because of the market turmoil your retirement investments need to be adjusted accordingly.

2. Relieve stress by printing out your 401(k) or IRA statements and tying them to a bottlerocket on the 4th.

1. You want to retire, it’s time for a new gameplan. Sneak a peak and start today!

If only our financial lives had glaring guiding stars in our daily journey. My grocery store is advertising that they are helping us eat better with the guiding stars. Between one and three stars appear below items to tell shoppers the nutritional value of a product (www.hannaford.com). Why shouldn’t my financial life have guiding stars? For the record, Hostess cupcakes and Ben and Jerry’s receive no stars. I thought dairy was good for me!

So here are my guiding stars on scale of 1-3 for your financial evolution, with 3 stars being things that will be the best for your financial evolution. It’s just a taste of stars, I’m sure I’ll add more at some point.

Aim for the stars.

3 stars

  • Understand your sustainable lifestyle expense. What do you need to live each month?
  • Laid off – rollover your 401k into an IRA with more investment options.
  • Determine how much you will need to retire and how the market turmoil impacts your retirement date.
  • Hold a state of your finances meeting with your spouse and write down your goals for the remainder of 2009.

2 stars

  • Determine if you need long-term care insurance.
  • Max out your 401k or retirement plan.
  • Go to work for a college so your kids tuition is free.

1 star

  • Refinance your mortgage to a lower rate.
  • Make an extra mortgage payment.
  • Consolidate credit card debt and work towards paying it off (read Dave Ramsey’s Total Money Makeover for another star.)
  • Work together as a family to reduce two ongoing monthly expenses .
  • Make one better financial choice each week. (Keep morning coffee and bring lunch!)

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.

Yes, I said windfall. First it was daycare expenses, then traveling sports teams, tutors, computers and clothes. Finally it was time for the big expense. College. Wondering if you will ever retire? You are not alone.

The Baby Boomers are in a different place than previous generations. Families are attempting to save for retirement while dealing with exorbitant college costs, as well as the challenges (sometimes financial) of aging parents. This is coupled with trying to save for their own retirement, which unlike previous generations does not include a pension.

While this is a big dilemma for most couples, I focus on the absolutes.

Where you cannot impact change:

  • Cost of college and that you did or didn’t save enough for the expenses.
  • Developing issues with aging parents.
  • The downturn in the financial markets.
  • How much you have saved previously for retirement.

What you can impact:

  • How much debt you will personally take on to pay for college.
  • Children’s college choice.
  • What you can afford to do for take care of parents.
  • How you can load up your retirement savings once college is over.

These items, taken one by one are manageable. I am going to focus on the last one. How you can capture the true windfall available when the kids are out of college.

In order to put junior through college you’ve paired down on your own expenses, creating a lower sustainable living expense or developing a reduced budget. Once college is over if you continue to live at this lower sustainable living expense you can put all the savings you were putting towards college into your retirement savings.

  •  Junior’s college cost – $40,000
  • Junior’s financial aide – $20,000
  • Your contribution – $20,000

 Post college add this extra $20,000 to your existing retirement savings and suddenly you have a windfall. In five years you will have put away an extra $100,000. If you were contributing $30,000 a year that number jumps to $150,000. 

This opportunity for extra savings works because you are taking the discipline utilized to pay for college expenses to pay yourself for retirement. If you are not maximizing your 401(k), 403(b) or other employer-sponsored tax-deferred retirement accounts you have another bonus awaiting you. Now you can afford to maximize your 401(k) at a$16,500 maximum this year for those under age 50 and $22,000 for those over 50. This will reduce your overall taxable income and lower your taxes. 

If your 401(k) contribution is now $10,000 larger for your family in the 28% tax bracket, this represents a $2,800 reduction in taxes.  

Saving more and reducing your taxes. It’s a win-win windfall. 

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. 

No one calls the IT guy to say, “My email worked great today!” Only when are you having troubles do you squawk. As an investor it is hard to acknowledge the main fact of the markets. They go up and they go down. It is human nature to focus on the down. This is very difficult for those that had retirement on the horizon and see it slipping away.

We also know that when markets go down in a recession that we do not want to miss the market upswing. Here is a great article to provide perspective on the market recovery in the six-months and five-years after a recession. If retirement is on your horizon you need to develop a new plan of action to recovery from the market. That is where I can help.

 https://www.americanfunds.com/resources/perspectives/recessions-perspective.htm

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. 

Long-term financial success for a family often includes sending the kids to college and enjoying retirement.  When you start to run the numbers it seems like achieving one will be hard enough, let alone both!

The earlier you make decisions about these joint goals the better your chances of achievement. Start by figuring out approximate savings goals. 

Retirement -Take a look at the budget to determine your sustainable monthly expenses. This includes determining what will be removed in retirement and what will be added.  If you plan to increase travel substantially in retirement, you will want to add this to your budget. Remember to approximate Social Security benefits. Engage retirement planning calculators online as well.

 College – Determining your college funding tolerance is essential. What is the type of school you would like to be ready to fund, and how much of the annual expenses would you like to pay? For example, a state university at 50% funding could be your savings goal. Again utilizing calculators to determine savings needs can be helpful.

 Move Forward with Savings – Once you understand your savings needs, determine how much you can save each month and allocate savings to your greatest need. Keep in mind that loans are not available for retirement, which makes it the priority.  Many families struggle with this fact and the desiring to not saddle children with debt.  If possible save for both.

 Alternatives to help achieve both sets of goals

  • Consider working part-time in retirement.
  • Take advantage of employer sponsored tax-deferred retirement plans ( 401k & 403b).
  • Start at community college and transfer for last two years.
  • Defer retirement a few years.
  • Alternate allocating your annual pay raise towards retirement or college savings.

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.