Market Mondays – 9/14/15
Hello all and welcome to another edition of Legacy Investing and Wealth Management Market Mondays! Last week I talked about why it’s important to have an investment adviser in your life. An Investment Adviser can be one of the most important people in your life as they can make sure you have a retirement to live on when you get there. I don’t know about you but I’m not trying to move in with my mom again as I get older due to lack of financial planning lol. I would rather have my feet up in a nice Caribbean island somewhere sipping on a cool beverage. And most people would also rather retire before they are 90 (from work that is..lol) so properly managing your finances so you don’t outlive your savings is key to having an almost stress-free retirement.
Here are 5 steps to retirement (hopefully well before you’re 65) –
By your early 50’s you should have at least 5x your current annual salary in a 401K or IRA or a combination of the two. When you get to full retirement age (which right now is between 65-67) and you have at least 10x your salary saved, then you are doing pretty good.
As you get closer to retirement you should check your asset allocations in your accounts. Generally, as you get older you should be taking less and less risk. That means you should be invested more and more in corporate, municipal or Treasury Bonds as they are less risky. The rule of thumb is to subtract your age from 100 and that is the percent you should be in equities (stocks) at any given time. The remainder should be in lower risk bonds.
Taxes – If you’re still pretty young and haven’t invested much in your 401K or IRA then setting up a ROTH IRA would make sense. With ROTH IRA’s all contributions are taxed first then you put the money into this account and let it grow. When you retire any money you withdraw is tax-free. This type of account is also a little more flexible in terms of withdrawals and you can do a search to find out all the other benefits to the ROTH IRA. Not to say there is anything wrong with regular IRA’s. For those who have a lot of money it may make more sense to keep it this way instead of converting to a ROTH IRA. If you convert then your taxes that year would be nothing short of astronomical. So the regular IRA can make a lot more sense for many people since you are generally in a lower tax bracket when you start taking withdrawals.
Another area to consider is health insurance. You cannot sign up for Medicare until you are 65 so insurance expenses should be in your budget until then. Luckily we now have the Affordable Care Act which offers lower cost insurance options for those who are not working.
Last, plans to carry on the Legacy should be in place once you retire eternally. A will, estate plan, power of attorney, etc. should be in effect so assets/property call pass easily to the next generations.
Legacy Investing & Wealth Management can help you get there so call us today for a free consultation.
Now to the markets…they are still in a range, probably until we hear from the Federal Reserve on Thursday. They are expected to either announce an interest rate hike for September or not. Once the market has clarity on what’s going to happen it will either move higher or lower. Because of how hard the market went down a few weeks ago it seems we are not out of the woods just yet. As I explained before we could have periods where the market goes up as violent as it went down only to start moving back toward the lows of 8/24 or even lower. I still believe in buying when there is panic and selling when everyone gets a little too giddy and in love with their stocks.
Until next week, make it a prosperous one and I wish you many happy returns!
Disclaimer – Legacy Investing & Wealth Management LLC or any of its advisers are not liable in any way for any losses incurred through trading by readers of this weekly blog. Any information or strategies of trading suggested here involve risk of capital loss and this weekly blog is not considered investment advice. Individuals who invest in securities are solely and completely responsible for any and every outcome that may occur.