Two Locations To Serve You
Auto Quotes
Homeowners Quotes

Life Insurance Quote

Archive for the ‘Financial Planning’ Category

Don’t Let a Disruption Derail your Retirement Plans

Don't Let a Disruption Derail your Retirement Plans

Everyone wants to have a fulfilling and less burdensome retirement, but one has to face the reality that not everyone can experience this. That is why planning your retirement ahead is very crucial. There are times when even the most prepared people face the financial setbacks that prevent them from saving enough for their retirement. These derails can be in the form of bills and emergencies that have to be tended to. Planning ahead may help but it is not enough to guarantee certainty.

According to Real Deal Retirement, there are three ways to eliminate the possible setbacks while preparing for your senior years; thus, not letting any disruption derail your retirement plans.

1. Consider alternate realities.

Forecast the possible scenarios. No one can really tell what is going to happen before or after your senior years, but you can forecast the things that can possibly happen. By doing so, you can prepare yourself for the possible setbacks of each forecasted scenario before reaching your senior years.

2. Create a safety margin.

If there are inevitable circumstances that happen while you are saving for your senior years, you must have had a plan that is flexible enough to handle all the possible setbacks and damages that these circumstances may cause. Some people try to increase their savings through investment. It is important to know your risk tolerance level. The risk tolerance refers to the amount of money you can bear to lose for investment, such as the money invested in stock market.

It is recommended to keep a percentage of your salary for your retirement while you are still young or strong enough to make money. It is always advisable to prepare for any expense through budgeting. Forty-four percent of the TD Ameritrade’s pollsters answered that saving money helped them recovered from financial disruptions and the other 36% answered that it is by getting an earlier start in saving money that helped them recovered from financial setbacks.

3. Take action quickly.

If you suddenly encountered a disruption on your retirement plans, it is important to take an immediate action. Cut on your expenses and enhance your savings. Proper budgeting is one of the key factors to help you use your money wisely. Just in case an emergency happens and you need to use one of your untouched savings, your retirement savings must be placed as the last resort.

It is important to part some of your budget for emergency and health so that these will be the first ones that you can spend when an emergency happens. If there is really a need for you to use your retirement savings, it is recommended to pay your tax and penalties first. As much as possible, do not use all of your retirement savings to pay for your debts and other expenditures.

The general rule is to reduce the amount of expenditures and save more. If you are one of the lucky people who earn a good value on their paycheck, it is still recommended for you to be prepared for all the possible setbacks because there is no harm in preparing for your senior years.

Five Ways to Find Your Down Payment

Five Ways to Find Your Down Payment

What’s the hardest part of the process for anyone preparing to buy a home? According to many in the real estate industry, it’s saving up a down payment. In fact, the National Association of Realtors and RealtyTrac have reported that at the rate Americans generally save, first-time homebuyers have to spend an average of 12.5 years amassing their 20 percent upfront investment. While you can buy a home with less—such as 3.5 percent down through the FHA, for example—you’ll pay a penalty in private mortgage insurance and, often, higher interest rates.

Fortunately, there are ways to save up faster and even find alternative sources of cash. Give these a try and 20 percent down may no longer seem like that large of an obstacle.

1. Find a Down Payment Assistance Program

According to RealtyTrac, 87 percent of U.S. homes qualify for down payment help, and there are more than 2,290 down payment assistance programs across the nation. You can start your search at Down Payment Resource, a website that connects homebuyers with down payment assistance opportunities. Use their online program finder to explore your eligibility. You can also check out your state’s housing authority website for a list of programs and participating lenders. Not all lenders participate in down payment assistance programs.

2. Make Saving for a Down Payment Automatic

Instead of waiting until the end of the month to see what you have left over to save for a down payment, schedule automated contributions to your designated savings account. It’s a lot easier—and less painful—to save when you budget accordingly and pull contributions from your checking account weekly, bimonthly or monthly. You can schedule transfers through your bank or ask your employer about your direct deposit options. Some give you the ability to divide and deposit your paychecks into multiple accounts.

3. Stash Extra Cash

Did you just win $50 on a lottery scratch ticket? Put it in your down payment savings account. Did your employer give you a 5 percent raise this year? Schedule an additional 5 percent of each paycheck for transfer into your down payment savings account. You get the idea; any extra cash that comes your way—from tax refunds and work bonuses to yard sale profits and inheritances—goes into your down payment savings account before you’re tempted to spend it on anything else.

4. Ask Your Family for Help

Most lenders will allow you to use cash gifts from family to cover at least a portion of your down payment. As of 2014, conventional mortgages generally allow you to use gift funds for your entire down payment as long as you’re putting down 20 percent or more of the purchase price. If you’re putting down less than 20 percent, part of the money can be from gifts, but part must come from your own earnings as well. The exact contribution limits vary by loan type. FHA and VA loans allow for gift assistance on the entire down payment provided your credit score is 620 or above.

5. Talk to Your Employer

Some employers offer mortgage assistance programs to their workers. Talk to your human resources department about the options—from down payment assistance to low-interest mortgages—that may be available to you. If you’re in the market for a new job, you might even be able to request down payment assistance as a signing or relocation bonus.

Anything worth doing is worth doing right, and for many, that means buying a home with 20 percent down. Whatever your real estate plans, please don’t hesitate to give us a call for further insight. We look forward to assisting you soon.

Is Your Employees’ Financial Stress Affecting Your Business?

Is Your Employees' Financial Stress Affecting Your Business?

More and more employees are worrying about their financial situation. This, according to the American Psychological Association, comes at levels that are higher than what is deemed acceptable. Younger people, parents, and those living on an income of less than $50,000 experience the most financial stress. If the describes your employees — then it’s something you should be concerned about as it affects your bottom line.

Negative Impact on Health

Not surprisingly, financial stress has a negative impact on health. On top of the list of many employee concerns is that to in order to make ends meet, many people no longer prioritize their healthcare needs.  Add this worry on top of medical conditions brought on by stress and it’s a self-feeding loop.

In a recent study, some have considered not seeing the doctor (9% of the respondents) when the need arises. The fact that a slightly higher number of people (12% of the respondents) have skipped going to the doctor altogether is even more alarming.

Stress also has repercussions on the social lives of people. In fact, 31% of adults with partners say that money is often a source of conflict in the relationship.

These numbers paint a telling picture. Despite recovery from economic recessions, many people still cite financial stress among their top concerns.

Income Gap Factor

Higher and lower-income households also experience a gap in the stress levels they experience. This is in stark contrast to stress levels a few years ago when there was nothing to suggest a significant gap was present.

But now, a clear gap has emerged with lower-income households citing higher stress levels compared to higher-income households.

Despite an overall reduction in stress levels, the average person still deals with higher levels of stress that is deemed healthy. This means otherwise productive members of the workforce may become a problem for businesses.

Negative Impact on Business

Beyond affecting their personal lives, financial stress on employees also have adverse effects on businesses. Among the negative implications are:

  • Absenteeism – Employees worrying about their finances tend to use  more of their sick leave and don’t go to work as often.
  • Lack of focus – Despite being present at work, they spend more time on unrelated activities such as talking to creditors and exploring their options. Moreover, many lose their focus and think about their finances up to three hours per day.
  • Low productivity – Several studies point out that companies stand to lose as much as 20 hours of productivity a month for every affected employee. This translates to around $5,000 of added cost per employee per year.
  • Health issues – As mentioned earlier, financially-stressed employees forego their healthcare needs. In turn, this leads to health issues that affect productivity and quality of work. This also contributes to fatigue, sleeplessness and anger.
  • Higher insurance rates – Stress in general can cause serious medical issues such as heart disease, eating disorders and substance abuse among others. For this reason, it is quite common for insurance rates to go up for companies with employees experiencing stress-related illnesses.
  • Workplace conflicts – Employees who are stressed out are less able to contain their personal issues at work. This results in incomplete tasks, tardiness and even accidents.
  • Dependence on employee benefits – Because of financial trouble, a significant number of employees may turn to the company’s benefits programs to help with their needs. Increased borrowing and frequent requests for pay advances are some of the telling signs of this. In turn, this could drive up costs for the company.
  • High turn-over rates – Financially-stressed employees may seek employment with better pay. This forces companies to get new hires that may not have the same experience and expertise. High turn-over rates forces the company to adjust constantly preventing them from relating with their staff.
  • Lack of commitment – Regardless of how much they make, employees experiencing financial stress are less contented with their pay. This could lead to a lack of commitment to their work and dissatisfaction towards their employer.

Financial stress isn’t just a stress for your employee — it’s  a stress on your bottom line as well. This issue should be dealt with sooner than later to improve their sense of well-being. An employee who feels secure tends to perform better and becomes a valuable asset to your company.

Should You Consider a Phased Retirement?

Retirement ConceptIf you’ve ever dived head first into freezing water or jumped into a hot spring, you know that extremes in temperature can cause a shock to the system. Sometimes it’s best to just ease in bit by bit if you want to remain as comfortable as possible. The same can be said about retirement. According to a survey conducted by the Transamerica Center for Retirement Studies, 64 percent of workers would like to enter their golden years in stages, slowly making the transition from full-time to part-time employment before collecting their final paycheck. If this type of opportunity appeals to you as well, consider the following questions and answers.

What are the benefits of a phased retirement?

Because phased retirement programs allow you to gradually reduce the hours you are working, they ease the transition between paycheck and no paycheck as well as work time and free time. This allows you to determine if you’re actually going to enjoy life without a job. It also allows you to test out a lower-income budget. And you get to do it all while still maintaining your social ties at the office.

Ultimately, phased retirement will keep you in the workforce longer. It may enable you to postpone tapping into your retirement savings or drawing Social Security. This decreases your chances of outliving your money.

Will my employer give me this option?

According to the Society for Human Resource Management, only 13 percent of U.S. businesses offer a phased retirement option. In 2014, 4 percent were formal programs, while 9 percent were informal opportunities.

The government recently implemented a phased retirement program for federal employees. Eligible federal workers began submitting applications for the program last fall. They are allowed to work 20 hours per week at their normal hourly pay rate as well as draw half of their retirement annuity. If they choose phased retirement, they must set aside at least 20 percent of their work week for mentoring other employees.

If the government’s program is successful, it is possible additional employers will follow suit. Many already fear losing large numbers of Baby Boomer workers without enough adequately trained replacements standing by. In fact, a 2011 survey of human resource directors conducted by the AARP found that 65 percent want to keep older workers on as part-time staff or consultants. They’re also very interested in developing knowledge transfer and mentorship programs (53 percent).

What else do I need to know?

Depending on your situation, a phased retirement could come with financial consequences in addition to a gradually decreasing paycheck. For example, if you have a pension, future benefits may be tied to your salary. You’ll need to find out how payments are calculated under your plan and if working fewer hours will reduce your payout.

Health insurance could also become an issue. If you enter phased retirement before you turn 65, you’ll be ineligible for Medicare. Unless your employer chooses to allow you to continue your work healthcare policy, you’ll have to obtain coverage some other way.

While using a phased retirement program to work longer and postpone dipping into savings may be a wise move, it doesn’t eliminate the need for careful financial planning. Whether you’re interested in a phased or traditional retirement, we are here to help. Please don’t hesitate to contact us with any retirement planning questions you have.