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FINANCIALLY Speaking 1% Solutions S by Jeffrey M. Orth, ChFC, CASL Investment Advisor Representative of HTK Jeffrey M. Orth is a Chartered Financial Consultant, a Certified Advisor in Senior Living, and an Investment Advisor Representative, with over 10 years experience as a business and personal planning, insurance, and wealth manage- ment specialist Jeff is available for group lectures and private consultations. Visitifitfinancial. com or call 408.842.2716. A5CM-0122-12E2 ometimes seemingly little things can make a really big difference in life. In this issue of “Financially Speaking” we are going to take a look at some strategies that can involve some ‘little steps” and may help you insure a financially sound retirement plan. When you run a business that focuses on helping people prepare for, and live successfully through, their retirement years, I often hear “the question”: “Will I have enough of money for my retirement years?” Effectively, they are asking if they are going to run out of money before they run out of life! Achieving financial freedom is a goal that all should strive for, but it is a goal that is hard to quantify. Fortunately, at Integrated Financial Benefits Network, we have some rather sophisticated software designed for both effective Social Security planning and retirement cash flow forecasting. For our purposes, “financial freedom” means that you will have enough money accumulated to stop working if and when you want. To do that, you need to set a dollar amount for your goal and develop a plan to reach it. When it comes to retirement planning, time can be either your friend or you enemy. With that in mind, here are a couple of “1% solutions” strategies…one with time as your friend because you’re in your 20s to early 30s, and second with time as the enemy, as you are much closer to the “finish line.” The “time is on my side strategy” is to save 1% of your retirement goal every year for 30 years with a 7% annual rate of return. So if you are 35 and your goal is one million dollars at age 65 you would want to save $833 per month ($10,000/year). This is a far less painful strategy if you start earlier and save longer. The more you delay setting money aside, the more daunting the task becomes. For example, if you start later in life and only save and invest your money for twenty years, you will then need to set aside 2% of your retirement goal, in this case $20,000 per year, and you would need an earn an 8% annual return. The lesson here is to start saving as much as you can as soon as possible. If saving was easy, everyone would have enough money for retirement. Sometimes people just need a little help to find the money. A while back, I met with a woman looking for help with her retirement planning. She said she had no money in her budget to put into savings each month. I noticed that she had walked into our first meeting with a Starbucks cup, and after talking with her, I found out she was going to Starbucks twice a day, ordering a “fancy coffee” and sometimes also buying a cup for a friend. That habit added up to about $5,000 per year FOR COFFEE! My point is that you are going to spend your retirement money now or you will spend it later – it’s your choice. In the example above, what would happen if you couldn’t make your retirement contribution because of your death or disability? The other 1% solution involves the purchase of life insurance, designed to build cash value, even if you are disabled, and the death benefit makes your retire- ment plan self-completing for your loved ones, if you were to die. That is why a small part of the money you set aside each year should be used to protect your most valuable asset…your potential earning power. Your income makes everything else in life possible, so you need to protect it. Life can be hard. Life can be unfair. But life is easier to deal with when you break it down into smaller parts. 1% solutions help bring these big challenges into perspective and make th VЦ&RvV&R6WFW2FR&FW7B'B0vWGFr7F'FVBN( 2WrV"( 2vB&W6fPFFRFRf'7B7FWFv&G2&V6rW &WF&VVBv3FRWF.( 226VG2f&FWF2&RF6R6VǒbFR7VW"B&RFWVFVBbBFB&W&W6VBDB6VBB&R66FW&VB27V6f0fW7FVB"rGf6RV6R66FW"W"F2&6VBW"FfGV6&7V7F6W2tԂFFBFW"Ɨ7FVBVFFW2&RFWVFVBbBVffƖFV@vFDBFVw&FVBf6&VVfG2WGv&fB&Vv7FW&VB&W&W6VFFfRbB6V7W&FW2BfW7FVBGf6'6W'f6W2ffW&VBF&Vv&"Fv6VBbVB2D&Vv7FW&VBfW7FVBGf6"V&W"d$42cCRf&fR7FR##R'fR4#cbCsSBsfB2FWVFVBbD4Ɩ033C#BffW""6Ɩ6FF7FFRvW&R&W&W6VFFfR2B&W&ǒƖ6V6VB"&Vv7FW&VB2BFW"Ɩ7vFG&v2v&VGV6RFRFVF&VVf@VBB&R7V&V7BF7W'&VFW"6&vW2B6RFW2wV&FVW2&R&6VBWFR6r&ƗGbFR7W&W"rBBrP$4$#PvևFF6У3P