About to retire? Here’s how to cope with stock-market shocks

Soon-to-be retirees sometimes start to panic about increased market volatility in the months leading up to the end of their work lives. Here are a few tips on how to help steady your retirement investments from two financial planners.

Investors have been shaking off periodic stock-market jolts as the bull marches on, but what about those planning to retire in 2018?

Soon-to-be retirees sometimes start to panic about increased market volatility in the months leading up to the end of their work lives, and that’s easy to understand because many of them have read or heard how devastating a negative sequence of returns early on can be for a portfolio.

It can be equally nerve-wracking to get too conservative now, knowing the nagging lessons about how portfolios will need to survive longer life expectancies.

“I remind clients that retirement is not a finite point in time, it’s the beginning of a 25-plus-year time horizon,” said Harold Evensky, a financial planner and president of Evensky & Katz, a Coral Gables, Florida, wealth-management firm.

For those planning to call it quits next year, here are a few steps to help steady the ship from Evensky, who works with individual clients, and Wade Pfau, a professor at the American College of Financial Services, who wrote a book aimed at do-it-yourselfers called “How Much Can I Spend in Retirement? A Guide to Investment-based Retirement Income Strategies.”

Create a bucket. Many advisers create complex bucket strategies aimed at locking up specific dollars for specific years in retirement, but that’s not what Evensky advocates. He creates a simple two-bucket approach, putting a single year’s worth of cash reserves into one bucket, with the remainder of retirement investments in the other. The cash-reserves bucket for his clients is invested in short-term bonds, but individuals could explore high-yield savings accounts as well. It helps retirees psychologically to not have to pull grocery money out of the investment portfolio, he said.

Focus on a different number. Rather than obsessing over the daily fluctuations of a 401(k) balance as work winds down, spend time verifying the future return assumptions built into an existing nest egg, Evensky said. Currently, he projects that a portfolio invested in 60 percent stocks and 40 percent bonds today will generate just 2.5 percent in real return after taxes, investment costs and inflation. If your return assumptions are too rosy, now’s the time to adjust, he said.

Be flexible. Pfau recommends that retirees stay flexible about their withdrawals from retirement accounts, because with a little flexibility, most likely retirees will be able to spend more earlier in retirement than they would if they had to commit to a spending level that won’t change in response to market conditions. He lays out several academic spending strategies from various researchers.

One example, from adviser Jonathan Guyton, involves funding a cash-reserve bucket made up of proceeds from rebalancing the portfolio, starting with an initial spending rate of 4 percent of the portfolio and adjusting for inflation thereafter. In negative return years, however, there is no inflation adjustment. And if the withdrawal rate rises by 20 percent above its initial level and life expectancy is still more than 15 years out, spending takes a 10 percent cut.

tag : Southbourne Group Singapore, Tokyo Japan

5 Tips for Year End Money Saving



NEW HAVEN, Conn. (WTNH) – Don’t look now but 2017 is quickly coming to a close! This morning, financial expert Roger Cowen stopped by our studio to talk about 5 smart money moves you can make now that will help your finances in 2018 and beyond.

1. Prep for Tax Season

• The tax filing season opens in January, so now is a good time to get ready.
• Start by getting organized.
• Get folders for all your income, expenses and deductions and your investments.
• You can break your deductions down by category; for example, create sections for medical, charity and business.
• You can even do a dry run on your taxes so you have a better idea of your tax situation.
• It’s a good idea to do this before the end of the year, because you still have time to take action if you choose to.

2. Reduce Your Tax Bill

• There are several steps you can take before the end of the year to reduce your tax bill.
• Look for any payments you can make early, like your January mortgage payment. If you can make it in December, you can deduct the interest on the current year.
• If you have a 401(k) at work, bump up your contributions so more of your income is tax-deferred.
• And, of course, be charitable! Donations made to charities in 2017 may be deductible on this year’s taxes.
• It can all be confusing, so see a tax professional if you have any questions.

3. Set Your 2018 Financial Plan

• Take a comprehensive look at your finances. Did you have any unnecessary expenses in 2017 that you can cut next year? Can you bump up your savings in 2018?
• If you don’t have a budget, now is the time to set one!
• You may also want to set up a meeting with your financial professional for an annual review, especially if you’re approaching retirement, so you can make any necessary adjustments.

4. Convert to a Roth IRA

• You may want to consider converting some of your money from a Traditional IRA into a Roth IRA.
• Here’s why: You do not get upfront tax breaks on a Roth IRA, however, your withdrawals are made tax-free as long as you are older than 59 1/2.
• But here’s the catch. Roth IRAs are subject to what’s called the 5-year rule; you cannot withdraw your earnings tax-free until five years after the tax year you make your first contribution.
• No matter when you make a conversion in 2017, the clock gets set back to January 1st, 2017.
• So, if you make a conversion in November or December, it’s like getting a free year! You’ll be able to start withdrawing your earnings tax-free a full year earlier than if you wait until next January.

5. Check Your Insurance

• Life insurance always seems to be a daunting topic because we are talking about what happens to your finances if or when you pass away.
• Life insurance takes care of your family, helping ensure they will be financially fit even when you are not around.
• A good rule of thumb is to get enough coverage for 10 to 15 times your current salary. (Source if you choose to use fact: Forbes)
• A life insurance calculator, like the on my website at cowentaxgroup.com can help determine how much coverage you actually need.
• Also, Make sure your beneficiaries are up to date.
• You may need to make changes if there were any major life changes, like births, deaths, marriages or divorces this year.

tag : Southbourne Group Singapore, Tokyo Japan

Top money-saving tips for holiday shopping

Black Friday (copy) (copy)

Stores are already full of Christmas merchandise and Thanksgiving is days away, so this looks like a good time to share some of my favorite money-saving holiday shopping tips.

In addition to planning ahead, staying on budget, and watching for sales and discounts, there are many opportunities to save money. That's true whether you're buying gifts, or just shopping.

Here are some examples:

Discount gift cards: Gift cards may be purchased as gifts, but they can also be used to make your own purchases. If you're planning to do a lot of shopping, or dining, at a particular place, check out reputable online resellers of gift cards, and you could get one at a nice discount to face value.

Gift cards are just another form of money. If you can get a $100 gift card for $90, you made money. Just make sure to only buy gift cards you'll use.

Some discount examples I found: You could buy a $100 gift card for Bass Pro Shops for $88 (cardcash.com), a $75 AutoZone gift card for $67.50 (raise.com), or a $50 P.F. Chang's gift card for $39.75 (cardpool.com). Note that, sometimes, gift cards are sold in electronic versions that can only be used online.

Gift card bonuses: Keep an eye out for bonus offers that can multiply your money. Restaurant chains, drug stores and even specialty retailers usually offer deals during the holiday shopping season in which the gift cards you buy may be worth 10 percent to 30 percent more than you paid for them.

That's helpful for gift-giving, or to save money at places you regularly shop or dine. Note that a "gift card" does not expire, but a bonus might come in a different form that could have an expiration date. So, you might buy a $50 restaurant gift card that doesn't expire, and also get a $10 "bonus card" with an expiration date.

Membership discounts: Say you want to give some movie tickets as gifts. If you're an AAA or AARP member, you can buy them at discounted prices.

Credit/debit card cash-back: Many credit and debit cards provide rebates in the form of cash-back, or points. Some offer larger rebates at particular stores, and many offer even larger rebates for online shopping launched from their website's online shopping portal.

Get in the habit of launching your online shopping from your credit or debit cards online shopping portal, and you'll save more money. If you're a member of an airline loyalty program with miles or points that can expire, use the airline's shopping portal to shop and you'll reset the expiration date on your mileage program.

Valuable protection: Take the time to know the benefits provided by different credit and debit cards, so you'll know the best ones to use.

American Express' "purchase protection" will cover a purchase if it's stolen or accidentally broken within 90 days — a great benefit, which I've used in the past, that's particularly helpful for purchases of small electronics that will be gifted to young people. Dropped your new smartphone in a lake? No problem.

Citi "price rewind" will let you register a purchase, track the price, and give you money back if better deals turn up. Some cards will automatically extend a warranty, or the time period when returns are allowed.

Speaking of credit cards, shoppers are likely to be solicited at checkout, both in person and online, with offers to immediately save money on their purchase by signing up for the store's credit card. Weigh such offers carefully, because store-branded credit cards typically offer lower incentives for signing up, come with fewer benefits and carry high interest rates.

Signing up for a credit card shouldn't be an impulse decision. Some store-affiliated cards may make sense if they have no annual fee, you shop there often and they provide ongoing discounts. As with any credit card, store-branded cards are only a good thing for people who avoid interest charges by paying off the balance due each month.

tag : Southbourne Group Singapore, Tokyo Japan

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