Navigating Your Course to Wealth

Your Retirement Savings Goal - If you’re not there yet, you’re too broke to stop saving

August 14th, 2008 Posted in Retirement Planning | 2 Comments »

When the economy is tough, we all look for ways to cut our expenses. And when the costs of bare necessities like food, heat, and fuel leap through the roof — like they’re doing now — anything that’s not absolutely critical is a candidate for the chopping block.

When times are tight, it’s tempting to consider the money you’re investing for your future as a non-critical expense. After all, every penny you invest today is money you can’t spend on groceries, gas, or other bills.

If it’s a choice between putting food on the table right now and saving for groceries several decades from now, the choice is obvious: Eat, so you’ll be around to enjoy that future! But if the choice you face isn’t quite so dire, those same rising prices make it all the more critical that you keep saving — now.

High Prices Are Robbing You Blind

Unfortunately, those same outrageously high prices that are making it so tough to make ends meet right now are also threatening your comfortable retirement. Inflation robs you blind today, tomorrow, and whenever it rears its ugly head. Not only does it cost you more to live today, but it also increases the amount you need to save to meet your needs during retirement.

Say, for instance, you have a goal of retiring with $1 million. That may look like a decent target today. Thanks to inflation, though, by the time you hit a normal retirement age, you’ll need a lot more socked away to have the equivalent of today’s $1 million in spending power. This chart shows just how much you’ll need at age 70 to replace $1 million of today’s dollars:

Current Age

3% Inflation

4% Inflation

5% Inflation

70

$1,000,000

$1,000,000

$1,000,000

65

$1,159,274

$1,216,653

$1,276,282

60

$1,343,916

$1,480,244

$1,628,895

55

$1,557,967

$1,800,944

$2,078,928

50

$1,806,111

$2,191,123

$2,653,298

45

$2,093,778

$2,665,836

$3,386,355

40

$2,427,262

$3,243,398

$4,321,942

35

$2,813,862

$3,946,089

$5,516,015

30

$3,262,038

$4,801,021

$7,039,989

25

$3,781,596

$5,841,176

$8,985,008

The farther away your retirement — and the worse inflation turns out to be — the more you’ll need to save to have the earning power you expect.

Are You There Yet?

But all is not lost. Whether or not you can keep saving now, whatever money you have already invested will keep growing between now and retirement, too — and it may be enough to reach your goal.

Assume, for instance, that you expect an average annualized 8% total return between now and age 70. The following table shows you how much you’d need to have invested today to meet that goal — without adding another dime.

Current Age

3% Inflation

4% Inflation

5% Inflation

70

$1,000,000

$1,000,000

$1,000,000

65

$788,982

$828,034

$868,616

60

$622,493

$685,640

$754,493

55

$491,136

$567,733

$655,365

50

$387,498

$470,102

$569,260

45

$305,729

$389,260

$494,468

40

$241,215

$322,320

$429,503

35

$190,314

$266,892

$373,073

30

$150,155

$220,995

$324,057

25

$118,469

$182,992

$281,481

If you’re not there yet, you’re too broke to stop investing. Inflation keeps pushing your target farther away, and the only way to successfully fight it is to keep on investing, even when it’s tough.

Identity Theft - Phishing & Vishing on Your Personal Accounts

August 7th, 2008 Posted in Financial Health | No Comments »

It’s a new language today for those of us in the last generation.  I know “fishing” to be  a past time done with a rod, a reel, and a nice lake.   In today’s world these terms mean something far less relaxing.  They refer to the attempt by unscrupulous individuals to gain access to your financial account information.  Whether this is at a Bank, a credit card, an investment account, even your gas bill.   The Phishing part is done by trying to get to you through the internet.   The Vishing part is done by leaving messages or communicating to you by phone.  That’s why it starts with the letter “V”.  Vishing meaning “voice”.

These methods involve leading statements to you in subject lines on your e mail that say:   “There is a problem with your Bank of America Account” or Fraudulent Action notice on your Visa Account”.  The trick is to get you to click and enter what experts say may be a “copy ” site that asks for your account number and so on to help you with your problem.  

The phone message is the same concept.   The only reason you might respond is if you have a Visa Card, or you wouldn’t be calling them.   This will start them right off on the familiar side of things talking with you about your VISA account.  Obviously, again, they are looking for account information.  

The same can be true for ANY account that you may have.  The key is to be suspicious as many legitimate companies that have your accounts will NOT communicate with you in this manner.

The other thing we encourage our clients to do is CHECK YOUR CREDIT RECORD.  By law, the big three credit reporting companies must supply you will a free credit report ONCE a year. 

It’s very simple to get.   For those of you who don’t like to go through computers to get your information you can call 1-888-379-3742 and follow the voice prompts and get it done over the phone.   I tried it for myself and it’s actually not complicated (surprisingly) .  You can get a report from all of the big three: Experian, Equifax and TransUnion.

For those of you who want to do it on line , you can go to www.annualcreditreport.com and accomplish it immediately.   There is NO CHARGE to do this. If for some reason you see where the site is asking for money to send your report,  check your web address carefully.   All it takes is one letter to be out of place and you are whisked off to a fraudulent site to try and check your credit report. 

Upon receiving your credit report and  credit score examine it carefully.   Anything you see that is out of place should prompt you to call the credit bureau immediately and begin the process to correct the data they hold. 

It is my opinion that if they make money supplying this information to vendor who get authorization to look at it, at least their responsibility should be is to have their information on you correct.  While it may take time to fix it would be worth it in the long run.

When I reviewed mine, I found there were two or three credit card accounts that had zero balances, and showed they’d never been used on my report.  From my point of view, these needed to be removed as I never asked for them, used them and so on.  I then began the process of getting them removed.

Identity theft is a big deal these days.  I believe that your chances of getting hit are like being hit by lightning because of the sheer volume of traffic on the internet today.  On the other hand, if someone is determined to get to your or you are careless, it could certainly happen to you.

Kevin P. Deckert CFP

President, Deckert Leahy Inc.

Holistic Financial Management

August 4th, 2008 Posted in Financial Health | 1 Comment »

You’ve always got your eye out for a good stock tip, and why not?  You’ve done pretty well for yourself.  You have a nice home, a sedan and SUV, a time-share at the beach.     

 

There are four brokerage accounts: you and your spouse have IRAs, a joint account, and that individual account you opened on a whim with the fellow that you met at the country club.  He sold you some tech stock.  The accounts all doing fairly well, you think, except for the tech.  You hear from your broker whenever they have a new issue to sell and it’s always a different voice on the other end of the phone.  The guy from the country club has moved to Jersey.  You’ve managed to put two kids through college, though the student loans are strangling you financially.  Then there’s some annuity you bought years ago from an insurance agent that came knocking.  You were in a good mood that day.   The contract is somewhere in a drawer.  You’re contributing to your 401K at work, 100 percent in equities (No guts, no glory, you tell your co-workers around the water cooler as you swallow hard), and your spouse has a small SIMPLE IRA.     

 

Your employer takes care of your health and disability insurance and you have a $100 thousand life insurance policy.  Whole life you think.  It did appear to have some cash value the last time you looked at a premium notice.  You carry a small term policy on your spouse–just in case.  You know you need to review that situation and it might be time to think about a trust.  Another bit advice you received on the 16th green. 

 

And, oh, yes, there’s that little bit of money you left in a pension two employers ago.  You just saw a statement.  It’s with all the other paper in the cardboard box in the hall closet.   

 

Then last week your spouse asked when you were going to retire.   You didn’t have an answer.      

 

Still looking for a good stock tip?  In what context?   

 

The American Heritage® Dictionary of the English Language, fourth Edition, defines ho·lis·tic [ h? lístik ]as emphasizing the importance of the whole and the interdependence of its parts, as in holistic medicine. 

 

Your financial health is a sum of its parts as well.  Liquidity, income, risk management, retirement and college savings, discretionary investments, and estate succession, are but a sample of the parts that must be added together to represent your financial health.   Investing in isolation and out of context of your “whole” financial situation is like buying hardware without knowing what’s being built.  Yet, as a practice, most individuals, as well as professionals in our industry, take the segregated view of the problem.   Lip service is paid to retirement and estate planning.   Trusts are written and go un-funded.   Retirement accounts are opened           

but contributions are never made.    Dreams go unfulfilled.

 

Why?  There’s no plan, no road map to follow.   But to draw a map you have to know the destination.   What is it you want to accomplish?  What are your financial goals?   Do you want to pass wealth on to your children?   Do you have a charity you wish to help?  Do you want to travel or build a retirement home?  Is there a business to pass on or sell?

 

Once you know the destination you can pack for the trip.  You can determine the need for estate planning, health and long term care insurance.   Income and liquidity needs will be easily calculated and in the end you’ll know what preparations to be make in building investments and implementing tax strategies.  

 

The journey takes a team of professionals, lead by a certified financial planner who understands your entire financial circumstance, who embraces your goals and objectives, providing the advice and assistance, and discipline, to get you to your destination.    

 

So, are you looking for a good stock tip, or a good “holistic” advisor?                      

Welcome to Perspectives on Finance by Deckert Leahy

July 30th, 2008 Posted in Uncategorized | No Comments »

Welcome to Perspectives on Finance!