July 2020 Living Debt Free and Wealthy Newsletter

The Biggest Retirement Killer
Do you know what the number one biggest obstacle to accumulating wealth is? Procrastination. Opportunity cost is a real thing and procrastination has serious side effects. It will make the difference between surviving in retirement and thriving in retirement.

Have you ever said; “We can’t afford to put any money away right now. As soon as we _____, then we will start saving”? The problem is that we always seem to have somewhere else to put our money. The truth is, there is never an ideal time to start saving, and you can always find a reason to put it off! Procrastination is the primary cause of financial failure and it will do more harm than receiving the worst investment advice or picking the worst investment vehicle. If you want to accumulate wealth and be financially independent, you need to start right now to pay yourself first. Let us look at the actual costs of procrastination

Consider, if at age 20 you decide that you want to have $1,000,000 by age 65, you need only save $113.44 per week in the savings bank @ 5%, but at age 50 you would need to save $860 per week. That is almost 7x the amount! Now some of your savvier investors will say, but that’s only at 5% I can do much better investing in mutual funds, stocks, or other xyz investment. If you could earn 10%, at age 20 it would only take $21.75/week while at age 50 it will take $576/week to reach that same $1,000,000 at age 65. That is over 10x the amount!

But, you may be thinking, I’m plenty young, I’ll wait a few years. I will be making more money, and it’ll be easier for me to start. After all, what difference can a few years make? If you invested $50,000 today, as opposed to starting in 10 years, at 7.2% your money will grow to $400,000. If you wait and start in 10 years, your money will only grow to $200,000. That is 50% less!!! Do you want to retire with 50% less money saved?

It is no secret compound interest has an extreme effect on your retirement savings. However, for it to work its magic, you must give it time. Procrastination robs you of that time. For help finding the money to put you on track for your retirement, or for a review of your situation give me a call today! 

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"With what we get, we can make a living; what we give, however, makes a life!"   

-Arthur Ashek

Interesting Facts:

-Most predators have eyes facing forward while most prey have eyes on the sides of their head.

-The Pyramids of Giza were more ancient to the ancient Romans, than Rome is ancient to us.

-A Stanford study found a high correlation between walking and creative thought output. Compared to sitting, those who walked demonstrated a 60% increase in creative thought output.

-The United Kingdom and Portugal hold the longest standing alliance in the world, it started in 1386.

-The month of July was named after Julius Caesar. 

Hoe will inflation affect your income?

A simple inflation rate of 4% means that in 10 years you will need to spend almost 50% more income in order to maintain your same standard of living.

If you are currently living on $25,000 of income, you will need to increase it to $37,500. (That doesn’t include the increased amount you will have to pay in taxes.)

While we can’t stop prices from rising, there are some things you can do to make your money last longer. But, you need to act now.

There are many ways you can lower your taxes and/or increase your income without sacrificing safety or guarantees.  
Deciding between 401(k)'s. IRA's and Roth Pt. 2
Last month, we began our talk about retirement vehicles and the things to consider when deciding on the right method to save towards retirement. We discussed tax liabilities, 401ks, withdrawal limits, and contribution limits. Here are the rest...

The next thing to consider is how much transferability and control you want. This is like the refund/exchange policy for your jacket. In a 401(k) you have very little control and you cannot transfer it unless you switch employers, and if you do; you may lose the match they provided. Additionally, you can only use the investment options your company provides. Roth’s and IRA's you have a lot more control about where and how you invest, as well as you can transfer it very easily.

The last thing to consider is your risk aversion. This is like selecting the style of jacket you want. Do you want to put your money at risk in the market? If this is the only money you are putting away for retirement, can you afford to lose it? In IRA's and ROTH's while generally, people invest in stocks or mutual funds, remember these are only tax codes. You can use whatever investment vehicle you want. (CD's, annuities, bonds, mutual funds, stocks, etc.). In 401(k)’s you are limited to what your company offers you.

Final decision! When making the final decision you have to think about all of the things we talked about earlier and decide what is most important to you

However, when writing this article, I left out an important option to consider... Cash Value Life insurance! Cash Value Life insurance is a powerful tool that can outclass all the other options.

Contributions : There are no contribution limits for life insurance!

Tax Liability : Like Roth IRA's, the income you take out is all tax-free!

Withdrawal Limitations : There are no early withdrawal limits or penalties, and you choose whether to pay it back or not!

Transferability : Life insurance transfers well to your spouse or heirs. Plus, if you feel it is not for you, you can take your money out and put it elsewhere!

Control : You decide where to allocate your money. Whether that is a guaranteed interest rate, or growth tied to one of the stock market indexes.

Risk Aversion : Your principle is 100% guaranteed. Even if the stock-market drops 90% you will never lose a dime!

The best part : It is self-completing and protects your family! If you die or become disabled, the life insurance will complete the plan for you!

For more information or help to decide which plan is the best for you, call my office today!