In retirement planning, the simplest questions to ask are oftentimes the most difficult to answer. JourneyGuide is a new retirement planning software designed to quickly provide those answers in an interactive application. We begin our five-part series on JourneyGuide by first looking at the most pressing question, “How much can I spend in retirement?” Traditionally, the focus of retirement planning has been on accumulating to a target account value. Clients are repeatedly told “you need to have X dollars before you can safely retire.” The emphasis has been unduly placed on an intangible figure that can have a negative impact on the advisor-client relationship. If the target account value appears too lofty, the client may react with an attitude of helplessness and have a very negative outlook towards retirement. Another outcome of focusing solely on the retirement account value is the abstract concept of translating an account value to something the client can better relate to; namely, a discussion about lifestyle and how much the client can spend in retirement. JourneyGuide’s innovative, patent-pending algorithms allow clients to see in real-time what is most meaningful to them, i.e. their retirement spending number. Instead of using an antiquated rule such as a   Read more…

Here’s the story: The Federal Deposit Insurance Corporation (FDIC), a government agency, insures accounts in its member banks, which include most banks in the United States. (There’s separate, comparable insurance for credit unions.)
A $250,000 insurance limit applies
per depositor per
bank. For example,
if you had $250,000
in a certificate of
deposit (CD) in one bank and another $250,000 in a CD in another bank, both accounts would be covered. But if you had $300,000 in one CD, only $250,000 would be insured. You can actually qualify for more than the $250,000 coverage at a single bank
if your assets are in different types of accounts. For example, an individual retirement account (IRA) is insured separately from a taxable account. So is a trust account. And you qualify for up to half the coverage on an account you own jointly with someone else. What’s not insured is any money 
you invest through a bank that’s not
in a checking or savings account. For example, money in a mutual fund the bank sells is not insured, even if the name of the fund includes the name
of the bank. But money in the bank’s money market account is insured.
The bank is required to tell you which accounts are insured   Read more…

The idea of diversification is that it’s smarter to own a variety of stocks
and bonds than trying to meet your financial goals based on the successful performance of just a few. But diversifying can be a challenge because buying a portfolio of individual stocks and bonds can be expensive. And knowing what to buy—and when—takes time and concentration. Mutual funds offer one solution: When you put money into a fund, it’s pooled with money from other investors to create much greater buying power than you would have investing on your own. In an actively managed fund, professional managers decide what to buy and when to sell. An index, or passively managed, fund holds all or some of the securities in an index. As a fund shareholder, you own the fund’s underlying investments indirectly rather than outright, as you do when you buy stock. Since a fund may own dozens of different securities, its return isn’t dependent on just a few holdings. Like stocks, ETFs are listed on a securities exchange, purchased through a brokerage account, and traded throughout the day at prices set by supply and demand and other market forces. You can give limit as well as market orders.   Read more…

Fixed Interest Rate Annuities The company that issues the annuity sets the current rate of interest it will pay on its contract with you and revises it periodically. Rates may be adjusted monthly, annually, or less frequently. When the rate changes,
it sometimes increases and sometimes decreases, reflecting what’s happening in the economy at large. But it can never go below he guaranteed rate, the state-mandated minimum that’s set when you buy the annuity. Guaranteed Lifetime Income Annuities You can set up your immediate annuity to pay out income monthly, quarterly, semi- annually, or annually. That can be a big advantage over other income-producing investments such as bonds, which typically pay on a fixed, semi-annual schedule. And remember that immediate annuities provide an additional benefit, since part of each income payment is return of principal on which you owe no tax. One criticism sometimes leveled at income annuities is that you lose control over your assets. However, some immediate annuities let you commute your contract, which means you can accelerate your payments, or take some or all of the cash value minus expenses in a lump sum at any point. Indexed Annuities By protecting your principal against
market downturns, the issuer of   Read more…

During your working life you may
have participated in several employer plans and opened a number of IRAs. Knowing where those accounts are and what they’re worth takes on even greater urgency as you turn 701⁄2 and must begin required minimum distributions (RMDs) from tax-deferred accounts. (Distribution is the official term for what are more commonly known as withdrawals that you take from these plans.) Consolidating your IRA accounts with a single custodian may be a smart move. It may save you money if you’re paying annual account maintenance fees to different custodians. More important, it means that all the information you need on your account values and the way those accounts are invested is contained in one consolidated statement. What consolidation doesn’t mean
is that all the IRAs are collapsed into
a single account. In fact, you can’t combine a tax-free Roth IRA and a tax-deferred IRA into a single account unless you convert everything to Roth status. Rollover IRAs are generally held separately from IRAs to whom you’ve made annual contributions. And, if you’ve made both deductible and nondeductible IRA contributions, you’ll want to be sure to keep records of the amounts in each category since you’ll need them to figure   Read more…

The Red Zone for Baby Boomers. The decade of danger lies in the five years before and after your retirement date. Market corrections, bear markets, Black Swan events and sideways markets can side line your retirement dreams and turn them into a nightmare. So it’s important to have a retirement game plan and an audible or two in your back pocket to back up your plan in case life hands you a setback. The world has changed. Globalization has made the planet smaller. Everything is correlated, so it’s hard to escape the gravity of the global impact of international markets on investments and even savings instruments. Baby boomers have already been through the grueling bear market of 1973-1974. Then came Black Monday, October of 1987 when the market shed 22% of it’s value in a single day! And again in 2001-2003 the market endured double digit-compounded losses due to the siren song of the emerging tech industry. Many a young boomer loaded up on tech stocks driven by the fear of missing out on the tech revolution. But nothing could prepare the baby boomers for the greatest economic upheaval in their generation, the devaluing of home real estate and the   Read more…