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Retirement Intelligence Information Services
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Asset Allocation
Often financial "experts" make asset allocation difficult to understand. My goal in this series of articles is for you to understand asset allocation thoroughly, in an easy to understand format.- FREE Retirement Calculator recommended by Ray Martin on the CBS Early Show - Watch the video clip
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| NATIONAL OVERNIGHT AVERAGES | TODAY | +/- | LAST WEEK |
| 30 yr fixed mtg |
|
3.80% |
|
3.76% |
| 15 yr fixed mtg |
|
3.11% |
|
3.02% |
| 5/1 ARM |
|
2.69% |
|
2.68% |
| 30 yr fixed jumbo mtg |
|
4.38% |
|
4.39% |
| 5/1 jumbo ARM |
|
2.94% |
|
2.89% |
| NATIONAL OVERNIGHT AVERAGES | TODAY | +/- | LAST WEEK |
| $30K HELOC |
|
4.60% |
|
4.59% |
| $50K HELOC |
|
4.24% |
|
4.24% |
| $30K home equity loan |
|
5.77% |
|
5.76% |
| $50K home equity loan |
|
5.50% |
|
5.47% |
| $75K home equity loan |
|
5.47% |
|
5.44% |
| NATIONAL OVERNIGHT AVERAGES | TODAY | +/- | LAST WEEK |
| 36 month new car loan |
|
3.13% |
|
3.13% |
| 48 month new car loan |
|
3.24% |
|
3.25% |
| 60 month new car loan |
|
3.34% |
|
3.35% |
| 72 month new car loan |
|
3.31% |
|
3.31% |
| 36 month used car loan |
|
4.36% |
|
4.36% |
| NATIONAL OVERNIGHT AVERAGES | TODAY | +/- | LAST WEEK |
| 6 month CD |
|
0.46% |
|
0.46% |
| 1 yr CD |
|
0.70% |
|
0.70% |
| 5 yr CD |
|
1.38% |
|
1.38% |
| 1 yr IRA CD |
|
0.71% |
|
0.71% |
| 5 yr IRA CD |
|
1.49% |
|
1.49% |
Retirement Practice Makes Perfect
Colleen Mulder-Seward, MBARetirement Calculator, Inc.
retirementpractice.com
Practicing for retirement is the only way to know if your plans will result in a match to your goals and desires. Which of the following plans do you plan on using to fund your retirement? When reviewing your plan, remember that most financial experts suggest that you will need at least 75 percent of your pre-retirement income, in order to maintain your standard of living in retirement.
1. Social Security Only
The Social Security Agency states, "under current law, if you have average earnings, your Social Security retirement benefits will replace only about 40 percent, so you'll need to supplement your benefits with a pension, savings or investments." Thus, you as an individual must create a plan that will replace the remaining 35 percent or cut your living expenses by an equal amount. But, with current funding of Social Security, it is estimated that all funds will be depleted around 2030 and diminishing payments are expected to start well before then. Because of its uncertainty and low income replacement possibilities, this is one of the poorest plans you can make.
2. Pension Only
You are lucky enough to have a good paying pension. You plan to use money from your pension as your only source of income, if Social Security does pay you anything, great, but you're not planning on it. Unfortunately, this plan may not be as safe as you think. Several major companies in the steel and airline industries have already defaulted on their pension plans. There is speculation that the next major industry to default on their pension plans will be the automotive industry, including both automotive manufactures and automotive suppliers alike. Others industry may default as well. If your pension defaults, what will you do then?
3. Social Security plus Pension
Read the above paragraphs to see why this is not the best plan.
4. Social Security plus Some Investments
Read the "Social Security Only" paragraph above and consider how your plan will hold up if you have to live on your investments alone. You do not have to guess what your future would look like. Using this retirement calculator, you can see it now.
5. Pension plus Some Investments
Read the "Pension Only" paragraph above and consider how comfortable your retirement will be if you have to live on your investments alone. Using this retirement calculator, you can see what your future would look like.
6. Social Security, Pension and Some Investments
You're no fool. You know that there is a good chance that either Social Security or your pension may default, so you've made some investments too to be on the safe side. Have you considered how your plan will hold up if you have to live if one of or both of these external income sources fail? Although, this is one of the better plans you can make for your future, you still need to run "what-if" scenarios with the help from a retirement calculator.
7. Investments Only
This can be the best plan of all, if executed properly. A study conducted by the U.S. Department of Commerce found that, sadly, only 5 percent of Americans have saved and invested enough money to be financially independent at age 65. So make sure your retirement investments are on track by using a retirement calculator. With this plan if your pension, Social Security or both do come through, then you have use this "found" money to donate to your favorite charity or spoil the grandkids.
So now that you have identified your plan and practiced your retirement through the use of a retirement calculator, you can start tracking your progress. This is a good first step toward your retirement education. To take control of your retirement future, consider a FREE subscription to the Retirement Intelligence Information Services newsletter, which provides investment education in easy to understand terms. The service is absolutely 100% FREE for everyone.
Copyright © 2008, Retirement Calculator, Inc. All rights reserved.
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Analysis of the Economics of Early Social Security Withdrawal
Robert J. Phillips
Chief Retirement Consultant
Deciding whether or not to take the early withdrawal of social security at age 62 can be difficult. If you need this income at 62 to fund your retirement the decision is fairly straightforward. Take it early! On the other hand, if you have another source of revenue to fund your retirement your decision will be primarily based on lifestyle, health and investment preferences.
Several factors can affect your decision. First is your life expectancy. If you are in good health and have a family history of living beyond 90 then waiting for full benefits may be best. Two other factors impact this decision. First and most important is the value of money or your expected return from your investments. If you are using other investments instead of social security to fund your retirement you should use the rate of return of these investments as your value of money. There is another way to look at the value of money. If you do not require the social security money to live, you can invest the distributions for the future. The rate of return of this investment is your value of money. If your investments will make larger returns such as stocks this would favor taking the early withdrawal.
The last factor impacting your decision is inflation. Social security includes an annual adjustment based on inflation. You cannot control this variable but you should be aware of its impact. If future inflation is significant it will favor a later full distribution
FREE Social Security Calculator:
Find Out Your Breakeven AgeWe developed a calculator to assist in analyzing the impact of taking early benefits at age 62 or waiting for full benefits at age 66 to 67 depending on the year you were born...If you were born in 1960 or later your full benefits will begin at age 67 and your reduction for early benefits at age 62 will be 30%. If you were born between 1946 and 1960 your full benefits begin as early as age 66. We have included a chart that summarizes information.
To use the calculator you need to input your year of birth. You also need to input a value of money up to 10% and a projected inflation adjustment. The calculator analyzes income generated over time from both the early and full benefit investments. It calculates the age at which full social security will catch up and breakeven with the early withdrawal. If you were born before 1960 your breakeven age will be impacted by the year you were born. An early breakeven age favors waiting for full benefits.
The social security calculator is not the final answer whether to take an early withdrawal but it does give you additional economic data to assist in that decision. Ultimately you must balance income, investments and lifestyle to optimize your enjoyment during your retirement years.
