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Think About Your Lifestyle Before You Retire

January 24, 2017
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Sometimes planning for retirement isn’t entirely about money.

How many words have been written about retirement? It’s a preoccupation for many, and we devote so much time, thought, and energy toward saving for the last day we go to work. Saving and investing in such a way that we no longer have to work may seem ideal at first, but it raises a question: what do you have planned for all of that free time?

What do you do with your first day? Maybe you finally take that big vacation you’ve been talking about. Or, perhaps, it’s time to catch up with your kids, grandkids, and other extended family. But, eventually, you come home from a vacation or a visit. While many of us have that first day mapped out, it’s the days that follow that we haven’t really considered.

Free time can be a luxury or a curse. The idea that many retirees don’t give much thought to what they will be doing with all of their free time. We are meant to enjoy our retirement, of course, so banishing the restlessness and loneliness that can come from leaving your job should be taken into consideration when you are planning.  In his book, You Can Retire Earlier Than You Think, investment strategist and radio host Wes Moss advises seeking out what he calls “core pursuits.” These are rewarding and engaging interests that can bring satisfaction and happiness to your life; charity work, hobbies, community activities, or public service are but a few examples.  Moss estimates that the most satisfied retirees enjoy three or four such pursuits as they go into retirement – though, there’s no reason that someone can’t find more ways to pass the time.

“Retirement” doesn’t mean “not working.” Not everyone is geared toward making their life about core pursuits. You may find that you miss working, or that you simply need or desire a little more income. Maybe you find that a part-time job is ideal for supplementing your retirement income? Or, perhaps, you have an idea for a small business that you’ve always wanted to pursue? Whatever path you take, it’s important to consider the options open to you once your time is finally your own. You’ve worked most of your life for it, so enjoying yourself during retirement should be a priority.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

 

 

Your Financial To Do List for the New Year

January 17, 2017
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We have compiled a list of frequently asked financial priorities to start thinking about as we approach a new year. What are your financial, business or life priorities? Your goals? Specify them, then consider investing, saving or budgeting methods you could use to realize them.

  • Think about deductions. If you have made a great deal of money in a given year and have the option of postponing a portion of the taxable income until the following year this may bring some tax savings.
  • Can you maximize your retirement plan contribution at the start of the year? If you can do it, and you want to do it, do it early, the sooner you make your contribution, the more interest those assets may earn.
  • Required Minimum Distributions? Retirees over age 70½ must take RMDs from traditional retirement plans. Make sure you are aware of the deadlines.
  • Transaction? Did you (or will you) sell any real property this year? Start a business? Receive a bonus? Sell an investment held outside of a tax-deferred account? These moves may have an impact on your taxes.
  • Charitable gifts? Remember, if you make charitable contributions this year, you may claim the deductions on your return.
  • Mortgage payments? Can you make a January mortgage payment in December, or make a lump sum payment on your balance? If you have a fixed-rate mortgage, a lump sum payment may reduce the loan amount and total interest paid.
  • Life changes? Did you marry or divorce? You may want to change beneficiary designations and/or take look at your insurance coverage. If your last name is changing, you will need a new Social Security card. Are you returning from active duty? Check the status of your credit, and the state of any tax and legal proceedings that might have been preempted by your orders. Review the status of your health insurance, and revoke any power of attorney you may have granted to another person.

Plan accordingly. At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110

Are You Prepared for the New Year Ahead?

January 16, 2017
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A New Year can bring a new outlook, new opportunities and new chances to improve your financial standing. As we welcome a new year, it is worth considering how you want to make the most of the next 12 months. A New Year is an opportunity and you may even say New Year’s Day represents page one. All the pages are blank to begin with and you now have the chance to write all the chapters and make this year a classic. You also have a chance to write a new chapter in your financial life by making the most of opportunities that may make the years ahead even better for you.

The New Year is a wonderful time for recommitting ourselves to things that are important to us. What could be more impactful than a fresh start and starting anew? With 2017 here, this can be an optimum time to set your goals and refine your investment philosophy and goals. The New Year tends to signify a fresh start and leaves us open to new possibilities, strategies and aspirations. I have found if you set aside time to plan, it will set the tone for the entire year. This small practice can allow you to make decisions and goals that are in line with your vision, and that ultimately impact your year to allow some meaningful change. You may want to reflect on the following as you begin the year:

What are your goals for the Year? Not only do you want to reflect on financial goals, but any goal you’d like to work toward or achieve in the New Year that may have financial consequences. For example, during the past year did you get married or divorced, have a child, decide to work less, change jobs or change short-term or long-term goals?

What’s truly Important to you and your family? Setting specific goals and scheduling dedicated time to achieve them is a powerful tool for realizing those goals. It not only clarifies what you have to do financially to achieve the goals, it prompts you to achieve them within a specific time. Review the goals you had last year, refresh what you are focusing on, restructure your investments and schedule dedicated time with your advisor to prepare.

Update your financial plan. All financial actions (or inactions) affect other financial actions one way or another. As we meet for our scheduled meetings, we can discuss any changes that may come up.

As the year has come to close, we are thankful playing an important role in your lives and helping to achieve what’s truly important. Happy New Year and the very best wishes for a prosperous 2017. At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

What is Comprehensive Financial Planning?

January 15, 2017
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Just what is “comprehensive financial planning?” As you invest and save for retirement, you will no doubt hear or read about it, but what does that phrase really mean? Just what does comprehensive financial planning entail, and why do knowledgeable investors request this kind of approach? While the phrase may seem ambiguous to some, it can be simply defined as: building wealth through a process, not a product. Your approach to building wealth should be built around your goals & values.

Comprehensive financial planning is holistic. It is about more than “money.” A comprehensive financial plan is not only built around your goals, but also around your core values. What matters most to you in life? How does your wealth relate to that? What should your wealth help you accomplish? What could it accomplish for others?

Comprehensive financial planning considers the entirety of your financial life. Your assets, your liabilities, your taxes, your income, your business – these aspects of your financial life are never isolated from each other. Occasionally or frequently, they interrelate. Comprehensive financial planning recognizes this interrelation and takes a systematic, integrated approach toward improving your financial situation. Comprehensive financial planning is  also long-range. It presents a strategy for the accumulation, maintenance and eventual distribution of your wealth, in a written plan to be implemented and fine-tuned over time.

What makes this kind of planning so necessary? If you aim to build and preserve wealth, you must play “defense” as well as “offense.” We have seen it is best to carefully plan to minimize taxes and debts, and adjust wealth accumulation and wealth preservation tactics in accordance with personal risk tolerance and changing market climates.

Basing decisions on a plan prevents destructive behaviors when markets turn unstable. Impulsive decision-making is what leads many investors to buy high and sell low. On the whole, investors lose ground by buying and selling too actively. A comprehensive financial plan, and its long-range vision, helps to discourage this sort of behavior.

A comprehensive financial plan is a collaboration and results in an ongoing relationship. Since the plan is goal-based and values-rooted, both the investor and the financial professional involved have spent considerable time on its articulation. There are shared responsibilities between them. Trust strengthens as they live up to and follow through on those responsibilities and the continuing engagement promotes commitment and a view of success.

Think of a comprehensive financial plan as your compass. Accordingly, as you craft and refine the plan, it can serve as your navigator on the journey toward your goals. The plan provides not only direction, but also an integrated strategy to try and better your overall financial life over time. As the years go by, this approach may do more than “make money” for you, it may help you to build and retain lifelong wealth.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

End-of-the-Year Money Moves

December 23, 2016
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Here are some things you might want to do before saying goodbye to 2016. 

What has changed for you in 2016? Did you start a new job or leave a job behind? Did you retire? Did you start a family? If notable changes occurred in your personal or professional life, then you will want to review your finances before this year ends and 2017 begins. Even if your 2016 has been relatively uneventful, the end of the year is still a good time to get cracking and see where you can plan to save some taxes and/or build a little more wealth.

Do you itemize deductions? If you do, great. Now would be a good time to get the receipts and assorted paperwork together. Besides a possible mortgage interest deduction, you might be able to take a state sales tax deduction, a student loan interest deduction, a military-related deduction, a deduction for the amount of estate tax paid on inherited IRA assets, an energy-saving deduction … there are so many deductions you can potentially claim, and now is the time to meet with your tax professional to strategize to claim as many as you can.

Could you ramp up 401(k) or 403(b) contributions? Every dollar you contribute to these retirement plans lowers your yearly taxable income. Lower it enough, and you might be able to qualify for other tax credits or breaks available to those under certain income limits. Note that contributions to Roth 401(k)s and Roth 403(b)s are made with after-tax rather than pre-tax dollars, so contributions to those accounts won’t lower your taxable income for the year. They will certainly help to strengthen your retirement savings, however.

Are you thinking of gifting? How about donating to a charity or some other kind of 501(c)(3) non-profit organization before 2016 ends? In most cases, these gifts are partly tax-deductible. You must itemize deductions using Schedule A to claim a deduction for a charitable gift. If you donate appreciated securities you have owned for at least a year, you can take a charitable deduction for their fair market value and forgo the capital gains tax hit that would result from their sale. If you pour some money into a 529 college savings plan on behalf of a child in 2016, you may be able to claim a partial state income tax deduction (depending on the state), but will need to check with your tax professional for specifics.

Of course, you can also reduce the value of your taxable estate with a gift or two. The gift tax exclusion is $14,000 for both 2016 and 2017. So, as an individual, you can gift up to $14,000 to as many people as you wish this year. A married couple can gift up to $28,000 to as many people as desired in 2016 and 2017. (The IRS prohibits a current-year income tax deduction for the value of a non-charitable gift.) While we’re on the topic of estate planning, why not take a moment to review the beneficiary designations for your IRA, your life insurance policy, and your retirement plan at work? If you haven’t reviewed them for a decade or more (which is all too common), double-check to see that these assets will go where you want them to go should you pass away. Lastly, take a look at your will to see that it remains valid and up-to-date.

Should you convert all or part of a traditional IRA into a Roth IRA? You will be withdrawing money from that traditional IRA someday, and those withdrawals will equal taxable income. Withdrawals from a Roth IRA you own are never taxed during your lifetime, assuming you follow the rules. Translation: tax savings tomorrow. Before you go Roth, you do need to make sure you have the money to pay taxes on the conversion amount. If you do this and change your mind, the IRS gives you until October 15 of the year after a conversion to undo it.

What can you do before they ring in the New Year? Little year-end moves might help you improve your short-term and long-term financial situation.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

 

Can Gratitude Make You Healthier and Wealthier?

December 21, 2016
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Learn to be grateful—it’s not just a Sunday-school platitude. Science shows that inviting thankfulness into your life is one of the most effective ways to increase happiness.  Being grateful, science has asserted, can make you happier, healthier and wealthier. Fortunately, there exists the science of happiness, by now comprising hundreds of experiments run at major universities about what makes people happy—and what makes happiness stick. Among the characteristics of happy people is gratitude. In fact, there is no greater factor in making us happy, according to the authors of The Happiness Equation: 100 Factors That Can Add to or Subtract From Your Happiness. Stephen M. Poulan is the author of several bestsellers, including Die Broke and It’s All in Your Head. He tells what finally got him to stop striving for what he didn’t have, and realize that the only thing he was lacking in his life was gratitude.

“In 1978, I was the 48-year-old chairman of an American Stock Exchange-listed venture capital firm. I had a lovely wife, Corky, and four incredible children: Michael, Lori, Tracy, and Dana. We had recently moved from a home on suburban Long Island to a 12-room apartment on New York’s Park Avenue. During the summer, the whole family stayed at a house we’d built on Martha’s Vineyard.” “Was I happy? No, I was living in the future. Not only couldn’t I stop and smell the roses, I couldn’t stop and smell dinner on the table, since I didn’t get home until 10 p.m. I was smoking three packs a day, and the only exercise I was getting was bending my elbow.” You get the idea.

Then one day at his physician’s office, Dr. Dove heard Poulan’s labored breathing and suggested some X-rays. The doctor found a troubling spot on his lung, and consulted with some cancer specialists. The oncologists pushed for immediate surgery, but his doctor asked for a biopsy first. While they waited for the results of the biopsy, Stephen and Corky Poulan made plans for how to take care of their family if he were gone or out of work forever. It would change their plans for where they lived, where the kids went to school, everything. Life seemed very grim as they waited for the doctor’s return. As he relates in, It’s All in Your Head: “Then Dr. Dove came into the hospital room and said, ‘Congratulations, you have tuberculosis!’ At that moment, my life turned around. I was given a reprieve. I felt that every day from that point on was a gift from God, sent via Dr. Dove. All the material things Corky and I figured out we stood to lose meant nothing. When we were going over the list, I had thought to myself, I would give them all up to spend another day with my wife and children.”

And from that point on, Pollan was grateful every day, not for what he hoped to have in the future, but what he had in the very present. But you don’t have to go through a cancer scare to experience gratefulness. As a sage once said, “How happy would you be if you lost everything you had…and then got it all back again?”

Research shows that people who actively practice gratefulness are happier. In fact, practicing gratitude is a very unusual discipline, in that it is impossible to feel gratitude and any negative emotion, such as anger, depression, or despair, at the same time. The journey to become a grateful person is not necessarily a natural occurrence. We can take certain actions that cause us to be more grateful, and to exhibit more gratefulness. Since you can’t be grateful and depressed or anxious at the same time, you’ll reach more of your goals. But didn’t we promise you would get healthier too? Leaving aside any potential benefits from lower blood pressure, less stress, and reduced anxiety, get this: it is said people who practice gratefulness began exercising one and a half hours more per week than the control group.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

The Importance of Giving Back

December 20, 2016
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As 2016 comes to a close, I encourage you to consider what was important to you this past year. December is thought of as the season of giving: to our families, of parties, of gifts and of donations to charities. It is reported 40% of all individual charitable donations are made in December. As the year ends, you may be reflecting on charity and sharing what you have been uniquely blessed with. In the hustle and bustle of the season, have you thought about why we give? It is my belief, and the belief I share with my family and friends, clients and employees, that charitable giving has to come from the heart and from your guiding principles first. To be truly meaningful, I suggest your gift should first be in alignment with what connects your values, personal convictions and beliefs to how you live.

In my own business, I have been involved with charitable planning for over 30 years. Charitable gifting is important and can truly have an impact on our families, communities and the world at large. At HFG Wealth Management, we believe it is important to give and give carefully. As the holidays are here, this can be a wonderful time for conversation with family on what matters most and how to plan to give. Giving is measured in the sum of our life experiences, relationships, values, talents and skills and what we do to improve the lives of others. It takes great clarity and confidence in your financial and estate planning to make intentional decisions on how to leverage your assets.

Whatever your preferred method of giving may be, contributions, volunteering and living with purpose can sincerely offer greater happiness and more meaning to life. Ultimately, it serves our communities and families to offer some impact onto the world at large through our contributions of time and money. It matters that we give. What will we do with what we have been given? The impact and lasting legacy generosity can offer is what matters most. At HFG Wealth Management, we believe it is important to use giving to influence and impact, change and shape our communities. It takes clarity and confidence in financial and estate planning to make intentional, holistic decisions about how to purposefully and meaningfully leverage your assets. I encourage you to reflect this season on how you feel led to change, improve and impact our communities through your personal giving.

Charitable Giving Planning

December 19, 2016
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As the year ends, you might be thinking about making a financial gift to your old school, or a church or charity.  We have pulled together a brief list of some of the more common gifts we have seen used.

Partnership gifts. These gifts are made via long-term arrangements between donors and recipient charities or non-profits, usually with annuity-style income coming to the donor and an eventual transfer of the principal to the charity at the donor’s death. A charitable remainder trust also allows you to pay yourself a dependable income (typically for life) and then distribute the remaining trust principal to charity. A charitable lead trust offers you the potential to reduce gift and estate taxes on assets passing to your heirs by making annual charitable gifts; your beneficiaries get the leftover trust assets at the end of your life or the specified trust term. You could even name a charitable life income arrangement as the beneficiary of your IRA.

You might opt to invest some of your assets in a pooled income fund offered by a university or charity. Your gifted assets go into a “pool” of assets invested by a fund manager; you get a pro rata share of the income of the fund for life, and when your last income beneficiary passes away, the principal of your gift goes to the school or charity. If you like the idea of a family foundation, you could consider setting up a donor-advised fund. You make an irrevocable contribution to a third-party fund, realizing an immediate tax deduction; the fund invests the money in an account you create. You advise the fund where the money goes and how it grows, but the fund makes the actual grants to nonprofits.

Lifetime gifts. These are charitable gifts in which the donor retains no powers or other controls over the gift once it is made. A lifetime gift of this sort is not included in what the IRS calls your Gross Estate (but typically taxable gifts are used in calculation of estate tax).  Lifetime gifts also include outright gifts of cash or appreciated assets such as stocks or real estate. A gift of appreciated stock could possibly bring you a charitable deduction to lower your income tax, and help you avoid capital gains tax linked to the sale of the appreciated shares. Through a gift of appreciated property, you can even transfer a real estate deed to a school or charity. You could even consider a retained life estate, in which you deed your home to a charity or non-profit while retaining the right to live in it as your primary residence for the rest of your life.

Estate gifts. These are deferred gifts you make after your lifetime, without impact on your current lifestyle. You can make a bequest to a charity through your will or a living trust without incurring estate taxes on the gift amount. A gift of life insurance to a university or charity can give you an immediate income tax deduction for the cash surrender value of a paid-up policy, and possible future deductions. You can also make an IRA gift or retirement plan gift effective upon your death, with the non-profit organization receiving some or all of the assets as you wish.

The caveats. As your income increases, you may face limits on the amount of charitable gifts you can deduct.  Keep in mind that your unique circumstances need to be weighed before making any decision. As with all tax and estate planning, we recommend discussing all planning with attorney or tax advisor to affirm that you are in a position to fully benefit from charitable deductions.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110

What Expenses Could Change When You Retire?

November 28, 2016
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Some costs could rise, fall or even disappear.

Your retirement may seem near at hand or far away, but one thing is certain: your future will differ from your present. Financially, that fact is worth remembering. Some of the costs you have paid regularly all these years may suddenly decrease or fade away. Others may increase.

Will your insurance costs rise with age? Maybe not. You may find that your overall insurance expenses decline. Yes, health insurance becomes more expensive the older you get – but those premiums are merely part of the bigger insurance coverage picture. If you stop working in retirement, you have no need for disability insurance. You might have little need for life insurance, for that matter. You may have paid off your home and other major debts, and rather than drawing income from work, you will be drawing it from investments and Social Security.

You can expect your medical expenses to increase. By how much, exactly? That will vary per household, but perhaps you have read some of the latest estimates.

How about your income taxes? If you live on 70-80% of your end salary in retirement – which is not unusual – then you may find yourself in a lower income tax bracket. Yes, your Social Security income may be taxed – but, even in the worst-case scenario, no more than 85% of it will be.   If you have invested using a Roth IRA, you will be looking at some tax-free retirement income – provided, of course, you have owned the IRA for at least five years and are older than 59½ when you start making withdrawals. While a Roth account held in a workplace retirement plan requires withdrawals beginning at age 70½, the withdrawals will still be tax-free if you follow IRS rules.

Will your housing costs fall? Over the long term, they may. Some retirees own their homes free and clear and others nearly do. Homeowner association fees and property taxes must still be paid, so, while that mortgage balance may be gone or nearly gone, other recurring costs will remain. Homes inevitably need repairs, so, in some random year, you may find your housing costs jumping. Downsizing and moving into a smaller home can also mean a short-term rise in your housing expenses. If you do downsize and move, you will hopefully relocate to an area where housing costs are lower.

Will you face education costs? You may have retired your own college debt, but if you have children forty or fifty years younger than you are, you could risk retiring with some of their student loan debt on your hands. That expense could linger into your retirement – a valid reason to reject assuming it in the first place.

One “cost” may disappear, leaving you with a little more money each month. Once retired, your constant per-paycheck need to save for retirement vanishes. So if you are assigning 10% or 20% of your paychecks to your retirement accounts, you may be pleasantly surprised to find that money back in your wallet (so to speak) after you transition into your “second act.”

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

 

Retirement Plan Considerations For Different Stages of Life

November 10, 2016
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Throughout your career, retirement planning will likely be one of the most important components of overall financial plan. Whether you have just graduated and taken your first job, are starting a family, are enjoying your peak earning years, or are preparing to retire, your employer-sponsored retirement plan can play a key role in your financial strategies. How should you view and manage your retirement savings plan through various life stages? Following are some points to consider.

retirementplanwordsJust starting out:
If you are a young adult just starting your first job, chances are you face a number of different challenges. College loans, rent and car payments all may be competing for your hard-earned paycheck. How can you even consider setting aside money in your employer-sponsored retirement plan now? After all, retirement is decades away—you have plenty of time, right? Before you answer, consider this: The decades ahead of you can be your greatest advantage. Through the power of compounding, you can put time to work for you. Compounding happens when your plan contribution dollars earn returns that are then reinvested back into your account, potentially earning returns themselves. Over time, the process can snowball.

Example(s): Say at age 20, you begin investing $3,000 each year for retirement. At age 65, you would have invested $135,000. If you assume a 6% average annual return, you would have accumulated a total of $638,231 by age 65. However, if you wait until age 45 to begin investing that $3,000 annually and earn the same 6% return, by age 65 you would have invested $60,000 and accumulated a total $110,357. Even though you would have invested $75,000 more by starting earlier, you would have accumulated more than half a million dollars more overall. That’s the power you have as a young investor—the power of time and compounding. Even if you can’t afford to contribute $3,000 a year ($250/month) to your plan, remember that even small amounts can add up through compounding. So enroll in your plan and contribute whatever you can, and then try to increase your contribution amount by a percentage point or two every year until you hit your plan’s maximum contribution limit. As debts are paid off and your salary increases, redirect a portion of those extra dollars into your plan. Finally, time offers an additional benefit to young adults—the potential to withstand stronger short-term losses in order to pursue higher long-term gains. That means you may be able to invest more aggressively than your older colleagues, placing a larger portion of your portfolio in stocks to strive for higher long-term returns.

Getting married and starting a family:
You will likely face even more obligations when you marry and start a family. Mortgage payments, higher grocery and gas bills, child-care and youth sports expenses, family vacations, college savings contributions, home repairs and maintenance, dry cleaning and health-care costs all compete for your money. At this stage of life, the list of monthly expenses seems endless. Although it can be tempting to cut your retirement savings plan contributions to make ends meet, do your best to resist temptation and stay diligent. Your retirement needs to be a high priority. Are you thinking about taking time off to raise children? That is an important and often beneficial decision for many families. But it’s a decision that can have a financial impact lasting long into the future. Leaving the workforce for prolonged periods not only hinders your ability to set aside money for retirement but also may affect the size of any pension or Social Security benefits you receive down the road. If you think you might take a break from work to raise a family, consider temporarily increasing your plan

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

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Copyright © 2017. HFG Wealth Management, LLC. Investment advisory services offered through HFG Wealth Management, LLC – An independent Registered Investment Advisory firm registered with the SEC. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Therefore, any information presented here should only be relied upon when coordinated with individual professional advice. [ more disclosures ]