Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research, Incorporated, a broker-dealer, member of FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors, Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now, here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate Kreinbrink bringing you today’s show. Hard to believe June is winding down. Last show for the month of June. Summer is moving right along. Those that are involved in any summer softball, baseball schedules, hectic times are nearing towards the end. I know a lot of the youth leagues are kind of winding up in the next week or so. High school side, regular seasons are winding up. Tournament time is right around the corner, so kind of gearing up for that and that last little push. 4th of July next weekend. So again, summer’s moving right along as it always does. Getting a little rain out there this morning, which is always good, especially where we’ve been over the last, I guess you could say month or so.
Anything is appreciated. And although it may mean mowing the grasses a little bit more frequently than what we’ve been accustomed to over the last couple of weeks, kind of be nice to see everything green again and have that growth and that green and that soft grass to kind of be on. And hopefully it continues to give us a little bit of soaking. So for today’s program, I know the last two weeks we’ve had Andy Ferguson with NelsonCorp Tax Solutions on covering various topics in the tax world, from end of the season filing from what he saw last year, starting to get into planning for filing for the coming year, letters and scams and all that stuff kind of gone on. All important. Anything that we discussed, have questions on, be sure to give us a call. I’ll be happy to go into that a little bit more with you.
But for today’s show, wanted to bring it back a little bit to more of the retirement planning, saving, investing, that type of thing. And some frequent questions or topics that we seem to be reoccurring questions that we get or themes that usually seem to come up and ideas for people that kind of cover a wide range of individuals, ages, where they’re at in their work, career, life, that type of thing. Anywhere from just starting to save to entering retirement to how do I continue to plan throughout my retirement? And you start with those individuals that are just starting to save. And it’s usually the toughest hurdle to get over is just starting to put away that first dollar for retirement, which seems like an eternity away, which is 30, 40 plus years down the road when life is happening.
And again, a lot of times they’re just starting to save. Maybe looking at a new house, maybe looking at starting a family, getting married, getting a car. Whatever the case may be, it’s tough to look at it and say, “Putting a little bit of this monthly paycheck away for retirement.” And the more you start putting away, obviously the earlier you start putting it away, the better spot you’re going to put yourself in later on in life when you start having those discussions as to am I ready to finally say I can retire? And again, when you start looking at it from an early perspective like that, I think you fall into two categories. And the first one is saving what’s left. You have your utilities, your bills, you have you would say your leisure, your fund money. And then if there’s anything left over, you’re going to spend that.
Well, we all know what happens with that. There’s usually not much, if any, that’s left over at the end of every month to save. Essentially, nothing’s starting to get put away. Versus the people on the other side that pay themselves as part of their monthly bills, utilities things. So you have your bills, but saving is part of that. And then if there’s anything left over is my leisure, my fun money, whatever, obviously you can clearly see which side is the better side to be on, making it a priority to start to put money away. And again, sticking to that, adding to it, starting with $20 a month, now adding it up to 25 and so on and just letting that thing continue to snowball, continue to build, continuing to build that momentum. And again, getting in that habit of paying yourself for later on down the road. We joke, but it’s so true that we’ve never had anybody come in saying they saved too much or they started too early.
Obviously, it’s always the opposite. They didn’t save enough and they didn’t start early enough. So again, having that resources, having that knowledge to be able to start putting away early will definitely put you in a better position later on. And obviously, those that are fortunate enough to have an employer that does put money into a retirement fund for them, find out if there’s any match and what that match is. And try whatever you can to put a hundred percent of whatever that match is. If they match the first 3%, then do what you can to put 3% in. If it’s they match 100% of the first so many percent and then 50% of the next [inaudible 00:05:51]. Understand what that means. Understand what you have to put in to get that full match.
That’s free money that they’re willing to put in for your retirement. You want to take advantage of any of that. As people continue to move on, as they get to maybe their middle of their working career, they maybe start to earn a little bit more. Maybe they start to pay some of their old bills off, their old loans off, financially get into a better position. Understanding what the different types of saving is from a tax standpoint, the benefits of putting it in now, the benefits of taking it out later, weighing the options, which is going to put you in a better position. And again, looking to save a little bit more and put it away for a rainy day. Obviously, creating that rainy day fund.
All these things that go into it. But again, extremely important to where you’re going to be at later on because, again, the earlier you start planning, the earlier you start having these questions with yourself, with an advisor, getting you on the right track, making sure you’re on the right path as far as for down the road. Again, it is going to make that transition from working into retirement so much easier when you get there the earlier that you start saving, obviously, and then obviously the earlier you start planning with somebody. And then again, you continue on that journey and making that decision from working into retirement.
This is one of the biggest steps that people make, and again, from a financial standpoint. But again, I think it’s oftentimes underestimated from a psychological standpoint. You have 30 plus years of getting up, going to a job, having that steady paycheck coming in every week, every two weeks, every month, however the case it may be. Now I’m going to a world where, again, I’m not necessarily maybe saving, but I’m drawing down all the assets that I had saved. I don’t have that regular paycheck coming in from an employer. Am I going to have enough to make this work? And if so, how long will my pile estimated be able to get me to that point? And again, I mentioned the psychological side. That is a big aspect of this. And being able to mentally, I think, prepare yourself to get there. And there’s a few things, again, that we encourage people to start doing the closer they get to that, they’re a year or two or three out.
Start looking at your finances. Start looking at not just what you have, but what you spend. Do a monthly budget. See how much you’re spending at the grocery store on average. See how much you’re spending in these different areas. And then that gives you a pretty good idea as far as what you will actually really need to live off of in retirement, and how is that going to be funded? If you’re old enough and it makes sense to draw your social security, how is that going to eat into what I need? Am I going to need to take out anything additional from any of my savings accounts? If I have multiple savings accounts in different tax buckets, whether it’s a Roth, whether it’s a tax-deferred, whether it’s a non-taxable account, we want to look at, okay, when do I draw out of each of those buckets and when? And what is the tax consequences for that now versus down the road to fund, again, what you’re going to need on a monthly basis?
So again, as you continue to get closer through these, there’s a lot of questions that come up. There’s oftentimes a lot of questions that are underestimated. People don’t know. Again, we joke, but it again is so true that you don’t know what you don’t know, and looking at all these things that you’re going to have to answer. It’s a daunting task to retire, and I think that’s what people don’t necessarily realize how many changes are going to happen. Is it insurance? Am I going to be able to stay on my company’s plan to a certain age? Am I going to have to go to the marketplace and get it on my own? Medicare if I’m old enough to be able to file for theirs, switching from my covered insurance at my employer over to a new insurance. Is my spouse going to be impacted by this?
Again, a lot of stuff to look at to answer to be able to fully be prepared to make those decisions. If you’re fortunate enough that you are eligible for a pension. Understanding all the options that are going to be out there, whether it’s a monthly check, whether it’s there’s a beneficiary survivor option to be able to elect if you’re married. Is there a lump sum option? The pros and cons of looking at that option. How that all ties into the big picture. If I take a little bit less to support a surviving spouse on my pension, how does that work into the decision I make as to when I take my social security benefit? Does it matter? Do we want to coordinate some of that now versus later? Can I delay my social security looking to maybe do some planning with some of my assets through Roth conversions, through any of that for a few years while income is low?
Again, understanding RMD age, the required minimum distribution when you have to start taking money out of those tax-deferred accounts. How many years do I have from the day I retire up until that point? Is there any tax planning I can do during that time to look at it? So again, a lot of stuff that gets thrown out there from day one up until retirement. Obviously, throughout retirement then there’s a whole ‘nother set of questions that come up. But again, you want to understand where you’re at, what you have, what options are available to you. A lot of times people just don’t know some of the options that are out there, and essentially nothing is done. Whereas if there was been a little bit of planning heading into that, they maybe, again, oftentimes get to keep more in their pocket and pay less to the IRS.
Never met anybody that said that wasn’t a good deal. So again, understanding where you’re at, talk to us, get some questions. Be happy to sit down with you, go over your situation, just lay things out and say, “This is where you’re at. This is where we want to get to. How do we get there? What is the most effective way to get there?” So again, if you have questions on any of that, give us a call. I’ll be happy to sit down with you. And again, just like Andy starts talking on taxes when he’s in there, time flies by. This is my area where, again, I can sit here and ramble on forever.
And again, just because of the complexity and the passion as far as taking these individual situations and helping people get the most out of what they have. So before I do run out of time and end the show today, want to mention that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of June will be donated to the Shop With A Cop for school supplies. Again, this is Nate Kreinbrink with NelsonCorp Wealth Management, bringing you this week’s Financial Focus. Thanks again for tuning in, and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research, Incorporated, a broker-dealer, member of FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors, Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.