Planning for the Long Haul: Is Your Plan for Retirement Bullet Proof?


The good news is we are living longer, but the bad news is that having regular employment, good health and the premature depletion of retirement assets is becoming a reality for many Americans. Despite plans for retiring later (compared to previous generations) at age 69 or into the 70’s, unplanned events are contributing to earlier retirement, despite the best retirement planning preparation.

According to a survey by The Employee Benefit Research Institute (ERBI), 40% of participants in the study plan to retire after age 70 citing personal financial concerns. However, previous research studies by the same group revealed that many workers are forced to retire before age 60. Consider why the outlook for an unexpected early retirement is happening to many people:

Layoffs and Terminations- The ERBI survey revealed that 26% of workers terminate out of their jobs before turning age 60. Older workers are often paid higher wages than their younger counterparts and unfortunately are often the first to be terminated. Even with an early retirement buyout, many have a hard time finding work with the same pay rate and benefits. The change in income is creating negative consequences for many as suspended savings contributions and premature liquidation is occurring when retirement assets become necessary for living.

Health Issues- Despite longevity increasing worldwide, many workers are forced to retire early due to health reasons. What we do to our health in our younger years affects us later; smoking, alcohol consumption, lack of a healthy diet and exercise and sleep deprivation are the most significant contributors affecting our health later in life with genetics being secondary.

Keeping yourself healthy and employed is imperative to your retirement plan’s success. By preparing yourself financially and taking care of yourself, your plans for retirement have a better chance of being bullet proof-regardless of what life hands you.


Are Early Retirement and Pension Buyout Offers a Good Deal for You?


In today’s economy, offers of an early retirement buyout for a current employee or a pension buyout directed at a former employee are becoming common as companies look for ways to cut costs. Many large employers are offering employees who are not yet at retirement age the option to take an early retirement buyout. Each company has their reason for providing the buyout, but mainly because it will save the company money to hire a junior employee to fill a senior employee’s role when the yearly salary is a factor.

For companies that had a pension plan for their employees, pension buyout offers have become standard practice due to the increasing costs of administering pension plans. Even though pension plans may not be currently part of the employer’s retirement plan, there may be former employees that have the pension plan. Companies have a desire to get the liabilities associated with the pension payments for retired employees off their balance sheets well ahead of their retirement start dates.

Both of these types of offers usually come with several options:

Factors to consider:

These types of offers are likely to continue given the unknown financial future, the tariff environment, and the worldwide economy. If you receive an early retirement or pension buyout offer, please contact our office for a consultation.  I can help you evaluate your offer and make the best choice for your personal situation.


GDP: Does It Affect Your Portfolio?


Gross Domestic Product (GDP) is the total of everything produced in a country, even if it is made by a foreign company or foreign workers within a country’s borders. GDP counts the final value of a product, but not the parts that go into producing it as a way to avoid ‘double counting.’ In many countries, GDP is measured quarterly by adding personal consumption expenditures plus government spending plus business investment plus exports minus imports (GDP Standard Formula: C + G + I + (X-M). But does GDP have a bearing on your portfolio?

GDP growth is a measure of an economy’s growth but is not an accurate indicator of stock market performance. Although politicians like to use GDP as a goal in measuring the health of the economy, stocks don’t track upward or downward depending on the GDP.

There are continuing factors impacting the U.S. GDP: 

Indicators that are relevant to stock market performance include current economic conditions, changes in financial conditions for companies, and future production forecasts. Two industries that affect the stock market, regardless of the country of origin, are the automotive industry and the technology sector. When production booms or lags in either of these, it reflects in the stock market where the company is based.

However, when the stock market is over-performing or under-performing, consumer confidence directly affects GDP. During a bull market, there is optimism about the economy and consumer spending increases. As a result, company valuations increase, expansion happens due to increased product demand, companies can borrow easily, and more jobs are available. When the stock market is underperforming, consumers are reluctant to spend, which has an impact on GDP.

If you have questions or concerns regarding the stock market and how your portfolio is performing, now is a great time to review it and plan for a market downturn.


Money Mistakes Parents Teach Their Children


Most parents want what is best for their children, but sometimes have habits themselves that equate to teaching their children poor financial habits. Children learn by watching their parents and other adults (modeling) and as they mature their mistakes and bad habits become hard to correct. Bad financial decisions can be especially detrimental when they become adults and are responsible for their finances.

Teaching your children how to be frugal and manage their money will have positive long-lasting effects and not negative consequences of overspending when it comes to their own money. Here are some common mistakes parents should avoid:

Using Credit to Make Frequent Purchases- Children that see their parents paying for everything with credit can’t understand the concept of using cash because they don’t see the actual payment happen. Parents that use credit for their own ‘rewards’ are enforcing spending by using credit and leading their children toward spending and credit problems without even realizing it.

Giving Children Money and Buying Items Each Time They Ask- Children who are consistently receiving what they ask for each time don’t learn delayed gratification. Often what they wanted and receive becomes less rewarding when they move onto the next new one. This ties into goal setting and teaching children to work (or wait) for what they want and is missed when parents over-indulge their children.

Parents are Trying to Keep Up with ‘The Johnsons’- When children see their parents buying items like their friends in proximity, they get the idea that they need to do the same. Children (and their parents) don’t see the income or debt side of what others do. Trying to keep up with someone else’s spending and acting like them is not a healthy plan.

Failing to Set Budgets- Parents that have a budget set for their monthly spending and give their children a spending budget model positive behavior and are more likely to model using cash for purchases. For most Americans, credit card spending is linked to buying outside of their budget because they don’t have the financial resources to in cash.

Not Saving into an Emergency Fund or For Retirement- Parents that don’t have either of these typically don’t see the importance of talking to their children about saving. When parents model saving and speak to their children about the importance of having money for an emergency or retirement, their children model the same behavior as adults.


SAI March 2019 Newsletter Approval 2427258.1