How to Plan for College and Retirement

Many parents struggle with deciding to plan for retirement or save money to pay for their child’s college education.  Yearly college tuition costs can range from $5,000 to $50,000 per year. 

Parents should not have to make the choice to plan for retirement or save money to pay for their child’s college education.  Your child may not be financially secure enough to take care of you when you get older which is a major reason why parents should plan for retirement.   You will need to save money for 30-40 years to have enough to cover your living expenses when you retire. 

Planning for retirement or saving money to pay for their child’s college education is an emotional choice. The decision to do one or the other should be a rational choice.  If you save money to pay for a college tuition that could total between $20,000-$200,000 that is less money that you can contribute to your retirement account.    

Think about worse case scenarios, if you child drops out of college you are stuck with a bill, less money in your retirement account and will have to take care of a child who is unemployed.  If your child changes their major or transfers to another school, this will extend the time they are in school and increase tuition costs.  You can’t control what your child does but you can control yourself.  If you take out a home equity loan you will also be stuck with another bill.   

Parents should plan for retirement because college tuition can be paid for with financial aid, savings bonds, 529 plans, part-time employment from 9^th through 12^th grade and summer jobs during their college education put the money in a high interest savings account.  

Suggest that your child apply for financial aid which can be either grants, scholarships, or loans.  If a child has to participate in paying for college they will be more responsible with their money, understand the value of money and the value of a college education. 

Talk to a financial advisor to get advice on how to save for both and the options available to you.  A financial advisor can help you determine what age your what to retire, how much you will need during retirement, how much you need to save to pay for your child’s college tuition. You can withdraw money from your retirement account but if your child decides not to attend college, you will have to pay a penalty on the money taken out of your account. If you lose your job or quit your job you may have to pay your loan in full and pay taxes and penalties on the money that was not repaid.

You cannot plan to pay for college tuition when your child is in high school.  Planning early is the key. If you save just $5 a month towards your child college tuition when they are born that equals to $260 a year.  You may have to tell your child that you cannot afford to pay for their college tuition. 

If your child does not get financial aid, encourage your child to go to a state college to cut down on costs.  You may have to make sacrifices, live in a modest home, live below your means and buy more needs vs. wants.  Ask friends and relatives instead of giving your child a gift to make a donation to their college tuition.  Whatever you decide make sure you don’t go into debt and make your current or future financial situation worse. 

Social Security is Not a Retirement Strategy

One of the biggest questions of those near retirement or in retirement ask is, “Will I have enough income during retirement to cover my living expenses?" The second biggest question asked is “Should I factor in Social Security (SS)”? Retirees should always include Social Security when creating their retirement portfolio.

The first thing you need to find out is if you are eligible for SS benefits. The time to find this out is at each job you work or by calling the Social Security Administration.

A common misconception by most people is that if SS taxes are taken out of your paycheck then you must be eligible for SS benefits. This is not true. Some employers do not pay into SS but are required to participate in a retirement plan. Find out whether your employer participates in SS and whether your position is be covered by SS. If jobs you work are not eligible for SS benefits and do not offer a retirement plan, you will need to create an alternative to make up for the missing income. Many federal government employees, certain railroad workers, and employees of some state and local governments are not covered by SS.

You will need at least 40 credits to be eligible to collect SS benefits provided you meet all the other requirements. If you are eligible for SS benefits the amount shown on your yearly statement, is an estimate and is not the amount you will receive when you begin collecting SS benefits. This is due to the windfall elimination provision reduction formula the Social Security Administration applies to determine your monthly SS benefit.

However, there are limits on how much you can earn while collecting SS benefits, and if you exceed those limits, your SS benefits will be considerably reduced. If your earnings exceed a certain level, up to 85 percent of Social Security benefits may be taxable. At full retirement age, no income restrictions apply and there is no penalty for additional income earned.

According to research by Prudential, SS benefits for those aged 65-74, accounts for 54 percent of total retirement income, for those aged 75-84, 61 percent and those 85 and older 66 percent.

One advantage of collecting SS benefits - it is guaranteed income for life that increases over time due to a mandatory Cost of Living Adjustment (COLA). COLA increases SS recipients’ benefits by a specific percentage because of yearly inflation. SS benefits also include spousal coverage. Benefits of a deceased recipient can be passed to a current spouse or child under age 18.

You must contact a Certified Financial Accountant (CPA) to determine the portion of your SS benefits that will be subject to taxes. You will also need to consultant a financial advisor to find out the best strategy to maximize your SS benefits. The best approach is to setup a meeting with your CPA and Financial Advisor and ask them to develop a strategy for you.

Most financial advisors do not calculate replacement rates the same way the Social Security Administration does which substantially changes the retirement income calculation. Ensure your financial advisor uses the Social Security Administration’s replacement rate to determine the most accurate retirement income calculation.

Unfortunately, most employees do not have a pension plan or retirement plan so their only income during retirement is Social Security. Pension plans are nearly extinct and employees now have to rely on employer provided retirement plans or their own personal savings in addition to SS benefits. In many instances, a combination of these is required to meet basic financial needs during retirement; some retirees may need all three sources. One factor to consider is living cost increases and many retirees are living longer. Other factors to consider: where you live, your needs, your health status, and your other financial obligations that can quickly erode your fixed monthly income. There are three options that you can take when collecting SS benefits:

·         Early retirement. If you take your SS benefits at 62, your monthly payments will be permanently reduced between 20% and 30%, depending on your date of birth.

·         Normal retirement. The "normal" or "full retirement age" that ranges from 65 to 67 depending on your date of birth.

·         Late retirement. You can wait until 70 to take your SS benefits.

Retirement must be carefully planned and must include the expertise of professionals such as a Certified Financial Accountant and Financial Advisor to ensure that you maximize your SS benefits and minimize your tax liabilities.

16 Superb Investing Strategies for Retirement

 

 

Many people ask for advice from friends, co-workers, family members, strangers and their financial planners about how to invest.  Many people panicked during the last government shutdown and volatile market fluctuations. Many were forced to spend all or a large portion of their retirement money or moved their retirement money to a savings account or CD.  

This was the wrong move to make. You must keep your money invested during the ups and downs of the stock market.

Every investor has different financial goals and objectives and should work with a financial planner to assist with meeting your goals.  Financial planners have expertise in how to survive the ups and downs of the stock market and can provide the best advice and if and when you should move your money. Here are sixteen superb investing strategies for retirement.

1. Get your finances in order - Pay down debt. Create an emergency fund 9-12 months. Get insurance. Set financial goals, set a retirement date. Plan for your estate. This will free up cash that can be used for investing. 
2. Define a strategy - Determine the goals you want to achieve. Identify whether you want to invest in small caps or big cap stocks, emerging stocks, etc. 
3. Research - Research the stock price history, executives, and annual report. Learn everything about the company before you invest.
4. Create a plan - Develop a clear plan where you are now and where you want to be financially. 
5. Identify your style - Take time to develop your personal investment philosophy.
6. Mentor - Get an investing mentor. Get advice from someone in your social circle who has an extensive financial portfolio you would like to emanate.
7. Asset Allocation - Decide on an asset allocation to help balance risk and reward by allocating a portfolio’s assets according to an individual's goals, risk tolerance and investment outlook.
8. Diversify - A well-diversified portfolio limits your exposure to risks so that your investments have time to earn real gains.
9. Companies - Invest in well-established companies that have name and brand recognition.
10. Risk tolerance - Identify your willingness to lose money.
11. Patience level - Identify your patience level will determine if you are able to wait for returns to generate income based on long-term growth.
12. Fees - Research the fees that you will be charged when investing such as commissions, management fees, cost of operating the fund, etc. 
13. Buy low, sell high – Buy when the market is experiencing turmoil. When the market bounces back, you will have achieved great gains.
14. Review - Review your portfolio each time you receive a statement. You asset allocations may have changed and you may have experienced more risk than anticipated. This can be corrected by rebalancing your portfolio.
15. Dollar Cost Averaging – Buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. This results in buying shares for a cheaper “average” price and earn a greater return than if you buy a large amount of shares at a single price.
16. Automatic Investing Plans – Online brokers allow customers to buy individual stock or money market accounts. There is no minimum investment and you can invest any amount.

Generate Wealth Right Now

                                              

Whatever you have been doing before regarding your finances stop doing it. See the advice of a true financial expert to help you blast away bad financial habits and achieve the life you always wanted. 

You go to see a dentist when you have a tooth problem, a doctor when you are sick, a mechanic when you car needs repair, a lawyer for legal advice, so why don't you hire a financial expert to help you with your finances? Well you still have time.  

Take charge of your finances now and go into 2016 with a bang!

I also have some great financial programs for you!

Financial Group Coaching

I now offer Financial Group Coaching. Group coaching will offer you financial advice, tools and resources in a collaborative forum with other like-minded individuals. This is an exclusive program with a small number of participants.

If you are interested in group coaching contact me at consulting at hefreemanenterprises dot com. You can buy now at https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=2GAW67KF35WHN.

If you want to go deeper and get more assistance here are some high impact programs to help you with your finances.

Financial Freedom Program

If you owe lots of debt, have bad credit and overspend, I have a Financial Freedom Program. After completing this program clients: will owe less money, will increase their credit score, free up money for unexpected emergencies, increase their household cash flow, will stop overspending, be able to buy what you want and need, best use of the money you have, and be able to plan for the future. I had a client who was struggling with debt. They had been a renter for twenty years and did not believe homeownership was possible. I helped the client create and maintain a budget, become debt free, increase their credit score by 120 points and was approved for a mortgage loan with a low interest rate. The client was the first person in her family to become a homeowner and became a role model for her daughter who also became my client. If you want to become debt free, have good credit and have money left over each month click here to purchase this program now! 

Financial Makeover Program

If you owe lots of debt and have bad credit I have a Financial Makeover Program. After completing this program clients: will owe less money, will increase their credit score, free up money for unexpected emergencies, and increase their net worth. I had a client that filed bankruptcy, had a repossession, had bad credit, and no savings. I helped the client rebuild their credit and they were able to purchase a single family home with a low interest rate, purchase two vehicles and pay down credit card debt. The client was also able to create financial goals such as starting a business. If you want to become debt free and have good credit click here to purchase this program now!

Credit Score Program

If you have bad credit, I have a Credit Score Program. After completing this program clients: will feel better, will get easily approved for personal or business credit, will have negotiating power, increase job opportunities, will save money in fees, will increase liquidity, and have more options and more choices when spending money. I had a client who had a 420 credit score and I assisted them by increasing their credit score to 700. They were able to purchase a home and create financial stability for their family. If you want to have, good credit click here to purchase this program now!

Only a few spots left. Sign up here. https://www.eventbrite.com/e/financial-coaching-via-email-with-harrine-freeman-tickets-18894997446

 

The second is a Phone Financial Coaching Program. In this program, you will get financial advice for 45 minutes once a week for 5 weeks. You get expert advice to all the financial topics you ever wanted to be answered. 

Topics include but are not limited to: credit, debt, budgeting, saving, investing, retirement, paying for college, paying off student loans and more.

Only a few spots left! Sign up here. https://www.eventbrite.com/e/financial-coaching-via-phone-with-harrine-freeman-tickets-19049620929

If you woud like more information feel free to contact me at consulting at hefreemanenterprises dot com.

I also create customized programs to fit your specific needs. Take action today. Don’t wait. Contact me at consulting at hefreemanenterprises dot com.

Kind regards,

Harrine Freeman

Owner, H.E. Freeman Enterprises

www.hefreemanenterprises.com

Financial Expert/Speaker/Author

As seen in Forbes, MSN Money, Marketwatch, NASDAQ.com, Yahoo

http://hefreemanenterprises.blogspot.com  (blog)

http://www.twitter.com/harrine