Monthly Articles - Information you may have missed
Tick. Tick. Tick.
The beautiful children you see here are four of my six grandkids. They are happy and well-adjusted, and they bring much joy to my life. They are also blissfully unaware of a potential disaster that might confront them when they are old like me: a vastly reduced Social Security benefit.
Shortly before I started to write this article, I read that the trustees of our nation’s Social Security program are predicting that the funds supporting the program will be depleted in 2034, one year earlier than was reported last year. If nothing is done to fix this, 70 million Americans will receive less than what they are receiving now in their monthly checks. It will not be pretty. It also won’t be pretty for my grandkids or anyone else. The clock is ticking.
I am not in a position to fix the Social Security problem, but I can help you prepare for what might be an uncertain future. Here are two things everyone needs to know:
- If you don’t save at least 15 to 20% of your gross income for your later years, those years might end up pretty crummy. Yes, it’s a big chunk out of your paycheck, but I honestly do not know of any other realistic way to deal with this.
- Compound interest is a beautiful thing, and it works best over a long period of time. One hundred dollars a month invested on the first of the month and earning 7% per year for 40 years will result in $264,012.48. That’s not a miracle, it’s math. No one can guarantee 7% every year, but you get the picture about how this might work for you.1
- Don’t put all of your retirement money in your 401(k) or tax-deductible IRA. Just as the future of Social Security is cloudy, we also don’t know about future tax rates, but my guess is they will be higher than today. Under current law, any money coming out of a qualified retirement plan will be taxed as ordinary income. The last thing I want for my clients is to have all of their retirement money taxed before they have a chance to spend it. When it comes to investing, tax diversification is just as important as asset allocation, but tax planning has to happen l-o-n-g before you are ready to start using your money.
My cute little grandkids probably don’t spend much time thinking about these things, but you should. If you are ready to take control of your financial life, call me for an appointment and let’s make a plan.
Mike Rich, CFP®, Pontchartrain Investment Management, 2065 1st Street, Slidell, LA 70458 985-605-5064
1This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rate of return used does not reflect the deduction of fees and charges inherent to investing. In this example, compounding occurs monthly. Investing involves risk, including loss of principal.
Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Past Articles
February 2019 - When Life Gets in the Way
March 2019 - The Only Financial Plan
May 2019 - Your Money Might Leave
June 2019 - When the Stars Align
August 2019 - Going For The Green
September 2019 - Grandchildren
November 2019 - Long Term Care
January 2020 - Financial Checklist
February 2020 - Financial Roadmap
July 2020 - Intro to New Clients
*Note that there is a gap due to Covid 19.
November 2020 - Liabilities and Taxes
January 2021 - Financial Checklist
February 2021 - The Salami Smuggler
March 2021 - Do You Want To Be a Financially Successful Person?
May 2021 - Time Is On Your Side
July 2021 - Live for the Present
October 2021- Storms Can Be Scary
January 2022 - The Secret
February 2022 - Estate Planning
April 2022 - Have your cake and eat it too
May 2022 - What is your money lifeline?
July 2022 - Do you have a financial 'road map'
October 2022 - Father Knows Best
November 2022 - Why you need me as your Financial Advisor
January 2023 - I don't care how you spend your
February 2023 - News Flash!!!! Wealthy People Have More Money