If retiring early is a goal you hope to achieve, you are not alone. The FIRE (financial independence/retire early) movement is growing at a rapid pace; and why not with markets hitting all-time highs? However, have you really examined whether retiring at or near the peak of a bull market is the wisest decision? What will it mean for your portfolio if the market crashes? Maybe not as much as you would think with some expert planning. Read more
One of the most joyful life-changing games and events for a couple’s financial plan is the birth of their very first child. However, you will learn quickly that “kids ain’t cheap!” In this article, we will give you my suggestions for great money moves for first-time parents like yourselves. Read more
Recently, one particular client was looking for someone to help them reach their goals before retirement. With a seven-figure portfolio, he has done quite well for himself. But he was now interviewing for help from a few brokers in town, and us. They decided to go with another firm. Read more
You may be eligible to start drawing Social Security as soon as you turn 62, but this doesn’t mean you necessarily should. By waiting a few years, you will get a higher monthly payment and potentially more total income. So how do you decide?
If you need Social Security to get by, then the decision is easy: take it when you can. If you’re in the much happier situation where your family is earning good money without Social Security benefits (say your spouse is working a well-compensated job), then the decision is also fairly easy. Your Social Security, in this case, is going to be pretty heavily taxed, so don’t take it yet.
But if all you care about is drawing the most Social Security you can before you die, the calculation is fairly simple:
Let’s say you’re eligible to draw $1,100 a month when you turn 62, but you would get $1,500 a month when you turn 67. In this case, by starting at 62 you would make $66,000 before you reach 67 (that is, $1,100 a month multiplied by 60 months). On the other hand, you will make $400 a month more by starting at 67.
So how long does it take, at $400 a month, to reach $66,000? The answer is $66,000 divided by $400, or 165 months. At 12 months per year, this means you would be even after 13 years and 9 months, when you are 80 years and 9 months old. If you die before you get to 80 years and 9 months, you would have gotten more by taking Social Security early; if you live beyond this age, you will get more by taking it later.
So how lucky do you feel?
This is a pretty typical case; for most people, it will take anywhere from 13 to 17 years to break even. If you come from a family where everyone seems to make it into their 90s, then you may want to take Social Security later. If you come from a family where no one seems to make it past their 70’s, it may be better to take the payment earlier.
But for most people, there’s more to the decision than this bottom line. As a CERTIFIED FINANCIAL PLANNER™, I’m in a position not only to help you take care of your needs, but also to help you consider the lifestyle. In other words, the decision becomes less about how you maximize your Social Security payoff and more about how you want to spend your retirement.
Who do you suppose you are to your financial advisor? Chances are you are less a person than a “type”.
Maybe you’re the corporate manager who takes risks. Maybe you’re the single parent struggling to build a college fund. Maybe you’re the middle-aged couple who must take care of ailing parents. Whatever the details, what you are not is a unique individual.
It has been my experience, that many financial advisors rely on a handful of investment models to cover the life circumstances their clients find themselves in. They have created six, or eight, or ten portfolios intended to encompass a broad range of circumstances and personality types, and their job becomes fitting you into one as best they can. Whether they have ten clients or a thousand, each will be fit into one of these models, one way or another.
At Heritage Investors, we refuse to shoehorn our clients into cookie-cutter investor models. It would be a disservice to our clients, and it doesn’t work.
Let’s say you are a married couple living next door to your married friends. You are all in your early to mid–40s, reasonably healthy, working decent jobs, and looking to retire in a couple of decades. Let’s say further that you both go to a financial advisor who drops you into the same “perfect” predetermined investment portfolio.
What happens when your life takes an unexpected turn? Life happens. You or your spouse—or both of you—may fall ill or be forced into long-term unemployment. All of a sudden your retirement 20 years in the future takes a backseat to making ends meet today. Or one of you is diagnosed with a terminal illness, and you realize you probably won’t be around in 20 years. At that point, your focus may be meeting expenses and providing for your survivors.
The point isn’t just for tragedies, either. Your calculations will also change with good fortune. Let’s say you come into an unexpected inheritance or some other windfall. Good for you! While you’re celebrating, though, you should also start thinking about how your new situation has changed your plans for the future.
As CERTIFIED FINANCIAL PLANNERS™, we at Heritage Investors pride ourselves on treating each individual or family situation as unique. That’s the way we like it, and that’s the way our clients like it as well. If you think that, you too, may like this approach, please get in touch.
The word virtual is defined as “being such in essence or effect though not formally recognized or admitted.” Each and every day the world we live in, especially in this rapidly changing digital age, seems to move further and further away from the concrete and closer to the virtual. The recent surge in Bitcoin is, even more, evidence of the movement. If you’re like so many others and ready to jump on the Bitcoin bandwagon, make sure you understand it before you dive right in. Read more