|What’s Your Financial Health Score?
In the future, will you become wealthier or poorer? Who knows, right? It seems like you would need a crystal ball to really answer that question given life’s up and downs. What if the answer is right in front of you? What if you can determine it from your present financial behaviors?
Two economists present a brief questionnaire – and an audacious claim. Last month, the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis published an article titled “Five Simple Questions That Reveal Your Financial Health and Wealth.” The authors, William Emmons and Bryan Noeth, argue that your answers to these questions can effectively predict your financial future.
|Yes, Young Growing Families Can Save & Invest
Plan to put yourself steps ahead of your peers. If you have a young, growing family, no doubt your to-do list is pretty long on any given day. Beyond today, you are probably working on another kind of to-do list for the long term. Where does “saving and investing” rank on that list?
For some families, it never quite ranks high enough – and it never becomes the priority it should become. Assorted financial pressures, sudden shifts in household needs, bad luck – they can all move “saving and investing” down the list. Even so, young families have planned to build wealth in the face of such stresses. You can follow their example. It is less an option than a necessity.
|What’s Fueling the Drop in Oil Prices?
On the New York Mercantile Exchange, a barrel of light sweet crude is currently worth well under $60. Prices have dropped more than 25% in a month and almost 45% year-over-year. What is behind this free-fall? How long will prices keep dropping, and who does this development hurt and benefit?
Oil prices haven’t cratered simply because of lessening demand. Make no mistake, waning demand is a major factor – and in its latest 2015 forecast, the International Energy Agency projected global demand for crude weakening further. But this is just part of the story.
|The Solo 401(k)
A solo 401(k) lets a self-employed individual set up a 401(k) plan combined with a profit-sharing plan. You can create one of these if you work for yourself or if you own a small business with just 1-2 full-time employees including yourself (the second FTE must be your spouse).1
Reduce your tax bill while you ramp up your retirement savings. Imagine nearly tripling your retirement savings potential. With a solo 401(k), that is a possibility. Here is how it works:
*As an employee, you can defer up to $18,000 of your compensation into a solo 401(k) in for 2015.1
*As an employer, you can have your business make a tax-deductible contribution of up to 25% of your compensation as defined by the plan. If your business isn’t incorporated, the annual employer contribution limit is 20% of your net earnings rather than 25%. If you are a self-employed individual, you must calculate the maximum amount of elective deferrals and non-elective contributions you can make for yourself using the methods in IRS Publication 560.1,2
|The Latest on Social Security
Social Security benefits are increasing 1.7% in 2015. This marks the fourth straight yearly cost-of-living adjustment, following a 1.5% COLA for 2014.1
Next year, the average monthly Social Security payment for a single retiree increases by $22 to $1,328. The average retired couple will get $2,176 per month in 2015 (a $36 monthly increase). A single retiree claiming benefits at the full retirement age of 66 in 2015 could get a maximum monthly Social Security payment of $2,663.
|Should You Apply For Social Security Now...or Later?
Now or later? When it comes to the question of Social Security income, the choice looms large. Should you apply now to get earlier payments? Or wait for a few years to get larger checks?
Consider what you know (and don’t know). You know how much retirement money you have; you may have a clear projection of retirement income from other potential sources. Other factors aren’t as foreseeable. You don’t know exactly how long you will live, so you can’t predict your lifetime Social Security payout. You may even end up returning to work again.
|Getting Financially Fit for Retirement at 50
When you turn 50, retirement starts to seem less abstract. In terms of retirement planning, a 50th birthday can act as a wake-up call. It may offer a powerful reminder to trailing-edge baby boomers and Gen Xers, many of whom are wrapping up their second act with inadequate retirement savings for their third.
You may find yourself with such a shortfall, and you wouldn’t be exceptional. Your peak earning years may arrive in your forties or fifties, but so do other responsibilities with big price tags (raising a family, caring for aging parents, building a business). Throw in some “wild cards” like divorce, bankruptcy, or health scares, and any fortysomething would be challenged to build significant wealth – and yet it happens.
|The Effective Investor
If what you thought to be true about your investments turned out to be false, when would you want to marklundknow?
For most people, investing can seem complicated and overwhelming when trying to uncover facts. For example, do you ever worry about…
Having enough money when you retire?
Picking the right stocks?
Whether you should be in or out of the stock market?
The performance of your portfolio?
Not having the right fund manager?
Choosing the right advisor to work with?
Paying too much for your investments?
Hidden fees in your investments?
The next market crash?
It’s easy to get opinions on questions of this type. It’s hard to get facts. In The Effective Investor, Mark Lund answers questions of this kind. The answers are based on results that can be measured.
“I recommend The Effective Investor to all my clients who are looking for an alternative to their high-priced investment advisors and want a simple common-sense approach to investing.”
Alan Erickson, CPA
Udall CPA Group, PLLC
“Financial expertise and competence truly shines in The Effective Investor. Our law firm confidently advises our clients to pursue the practical strategies and insights found in this book.”
Ryan E. Snow, JD/MBA
Estate Planning Attorney
Novas Law Group, PLLC