History tells us that presidential election years can be nerve racking for investors. But they don’t need to be. Retirees and pre-retirees worried about the impact of election year volatility on their portfolios can avoid unnecessary losses by assessing and strategizing for the triggering events ahead.
As the largest generation of retirees in U.S. history streams into retirement, they enter their golden years with uncertainties and challenges like no previous generation has faced. A staggering 76.4 million Americans born during the post-World War II “baby boom” have already started retiring and will continue to exit the workplace over the next 20 years.
On the topic of estate planning, Warren Buffet once said: ”I want to leave my children enough that they feel they can do anything, but not so much that they do nothing.” Naturally, Mr. Buffet was making light of pretty weighty topic, especially for a man with a roughly $74 billion estate to plan for. But if you’re among the majority of middle class Americans who think estate planning is for people like Warren Buffet and not you, you have another think coming.
Investing during your working years is aimed at wealth-building and utilizes a growth strategy in which you invest aggressively in stocks that will gain in value over the years (and decades), allowing those significant gains to build a nest egg for retirement. Younger investors can generally afford to take on market risk during their working years, since they have time to make up for losses caused by volatility.
A funny thing happened in July of this year—the first generation of Baby Boomers born in early 1946 turned 70½, the age at which mandatory required minimum distribution (RMD) withdrawals kick in. Right behind them are the younger Boomers, following at the rate of 10,000 people per day for the next 18 years. They too will be obligated by law to begin mandatory withdrawals from their retirement savings.
Before the Bipartisan Budget Act of 2015 passed, the Social Security Disability Insurance Trust Fund was projected to be depleted sometime this year. Congress shifted tax revenues from the Old Age and Survivors Insurance Trust Fund to keep disability benefits fully funded. However, Social Security still faces long-term shortfalls under currently scheduled funding and expenditures.
Boxing great Joe Louis, who won—and lost—a few fortunes in his lifetime once said “I don’t like money, but it quiets my nerves.” Many aging and retired Americans are feeling that same tug of war with finances. They’re unnerved, despite positive economic news and a high rate of optimism among younger investors. In fact, retired investors’ optimism plummeted sharply in the second quarter due to concerns about the economy.
Boxing great Joe Louis, who won—and lost—a few fortunes in his lifetime once said “I don’t like money, but it quiets my nerves.” Many aging and retired Americans are feeling that same tug of war with finances. They’re unnerved, despite positive economic news and a high rate of optimism among younger investors. In fact, retired investors’ optimism plummeted sharply in the second quarter due to concerns about the economy.
By contributing your after-tax dollars to a Roth 401(k) or Roth IRA, your money grows without the burden of taxes each year, and when you retire you can minimize taxes on withdrawals by following a few strategies. However, there are some significant differences between the two accounts that can have important implications for your retirement finances. Here are some of the most important ways the rules differ between Roth 401(k)s and Roth IRAs.
Pre-retirees and retirees are already worried out about outliving their nest egg savings, and fears about election year market volatility aren’t helping matters. A number of studies show that baby boomers worry about their savings lasting throughout their retirement, and their concerns are valid. At Lake Point Advisory Group, we work to address these fears with a practical approach to examining each client’s individual portfolio and finding ways to protect their savings.
When you retire, your financial priority turns to making sure that your nest egg lasts the rest of your life. If you’ve been saving and contributing to a 401(k) or IRA over your lifetime, you still have to etch out a plan that establishes an income stream to hold you for the next 30 years. Stock market volatility is no friend of retirees, but it doesn’t have to be an enemy either; if your retirement portfolio is fairly conservative, properly diversified, and you’re not the type to panic and sell when a stock tanks, you can generate income from the markets.
As millions of baby boomers join the fast track to retirement, earnings from their workplace and other income sources often begin to reach a peak. This usually happens at the same time certain expenses decrease—the kids’ college tuition costs are behind them, or they’ve paid off their home mortgage. Life becomes less financially demanding, in theory anyway. There’s still a retirement income stream not too far ahead to think about.
Almost half of potential homebuyers don’t shop around for a mortgage, according to the Consumer Financial Protection Bureau (CFPB), the Federal agency responsible for regulating the mortgage industry. A just-released CFPB survey of 5,000 people who secured a mortgage in 2013 found that 47 percent of consumers looked at just one lender before completing a mortgage application. A whopping 77 percent of mortgage consumers actually applied with only one lender, and rates on a 30-year fixed conventional (non-FHA) loan varied by more than 0.5 percent among lenders.
