Retirement & Financial Planning

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Why Choose a Qualified Kingdom Advisor?

There are a lot of qualified financial advisors. But can they help you be a faithful steward of the finances entrusted to you?

As a Christian striving to live a life of purpose and contentment, you need an advisor who can give you advice based on the biblical principles of stewardship.

At Hicks & Associates, we share your Christian world view. We’ll help you create a financial plan that aligns with your deeply held values and beliefs.

C. Theodore Hicks II, CFP® Financial Advisor theodore.2.hicks@ampf.com (910) 692-5917

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WHAT’S OLD IS NEW AND WHAT’S NEW IS WELL, UHM, NEW? Page 6 5 TIPS FOR CUTTING DEBT Page 8

HOW MUCH DO I NEED TO SAVE Page 10-11

HOW TO BUILD A COLLEGE FUND Page 12-13

SAVING & INVESTING: WHAT NEXT? Page 14-15

Contents

SAVING FOR RETIREMENT: THE TIMELINE Page 14-15

BEGINNER’S GUIDE TO BUILDING A BUDGET Page 18

RETIREMENT LIVING: SHOULD WE STAY OR SHOULD WE GO? Page 19-20 ON THE WAY TO A FINANCIAL PLAN Page 21

RETIREMENT RETROFIT Page 22-23

SENIOR CITIZENS ORGANIZATION TO GIVE WORKSHOP ON LONGTERM CARE PLANNING Page 24

SIMPLE MEANS TO |SAVING MONEY Page 25 DELAYING RETIREMENT HAS FINANCIAL, SOCIAL BENEFITS Page 27 HOW TO MANAGE PERSONAL DEBT Page 28-29

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retirement & financial planning | 4

ELDER CARE LAW FIRM, PLLC LONG-TERM CARE PLANNING FREQUENTLY ASKED QUESTIONS

Jason Sutton, Attorney Jason Sutton is the founder of The Elder Care Law Firm, PLLC. He earned his Bachelor of Science degree in Business Management from North Carolina State University, while on a four-year athletic scholarship to play varsity basketball for the Wolfpack. Mr. Sutton earned his Juris Doctorate from Cumberland School of Law at Samford University in Birmingham, AL. In addition to being a member of the North Carolina Bar Association, Mr. Sutton is also a member of the National Academy of Elder Care Attorneys (NAELA). As a member of NAELA, he strives to raise his practice to NAELA’s Aspirational Standards, and to conform his practice of Elder Law to NAELA’s mission to establish NAELA as the premier providers of legal advocacy, guidance and services to enhance the lives of the aging population and people with special needs.

Q: What is long-term care?

Long-term care is defined as the care needed when an individual needs assistance with performing two or more of his/her “activities of daily living” (i.e. bathing, dressing, eating, transferring, toileting and continence). This care can be provided in one’s home, an assisted living facility or a skilled nursing home.

The care is either provided by family members or licensed caregivers.

Q: How much does long-term care cost? In 2011, the national average for a one-month stay in a skilled nursing facility was $7,148 ($85,774/yr). The national average for a one-month stay in an assisted living facility was $3,270 ($39,240/ yr). The national average cost for a home health aide is $20/hr.

Q: How is long-term care paid for? In 2011, nearly 3 out of 5 nursing home residents relied on Medicaid to help pay for their care.

The other individuals relied either

on long-term care insurance, Veterans benefits, their own savings and resources or a combination to fund their nursing home care needs.

Q: Why should I plan for longterm care? Planning for long-term care gives you peace of mind knowing you’ve done all you can to protect your life savings in the event the need arises. With the costs of LTC increasing each year, no one is immune to the potential financial devastation long-term care could cause.

Q: Does our government give us any incentive to plan for our longterm care needs? Yes. Currently there are some tax advantages to investing in long-term care insurance.

However, our biggest incentive came January 1, 2011, when NC signed into law the Long-Term Care Partnership Program. This program encourages us to plan for our future long-term care expenses using long-term care insurance with the security of knowing that if we exhaust our insurance there will

still be some help available through the Medicaid program.

Q: Can’t I just wait until the need arises and then plan for my care?

Planning can be done at any time.

However, planning before the need arises gives you the opportunity to utilize more options and strategies to protect your independence and the control of your assets.

Q: What if I already have a loved one needing long-term care?

Planning can be done at anytime, even if your loved one is already in a nursing home! It’s amazing how many people think it’s too late to protect assets because their loved one has already been diagnosed with dementia/Alzheimer’s or is already in a nursing home. No matter what your current health status is, long-term care planning can still be financially beneficial. Whether you’re healthy and in no need of care or you’re already receiving care, you need to know your options.

LONG-TERM CARE PLANNING Chances are, someone you know has received some form of long-term care in the past, or is currently receiving it now. How did they plan for it? What were their options? Did they use their savings, long-term care insurance, Medicaid, or Veterans benefits to help pay for their care? Was their home “protected” from their costs? I hear questions like these every day, and unfortunately, most of us don’t know where to turn to get the right answers.

With the average cost for nursing home care exceeding $7,000 per month in the US last year, we can’t afford to keep this type of planning on the “back burner” any longer. Are you willing to risk your FINANCIAL SECURITY and FUTURE HEALTH CARE by assuming you’ve already “taken care of things?” Let me show you how to protect your life savings.

I’ve acquired a wealth of knowledge and experience in the area of long-term care planning over the span of my career as an elder law attorney, and I want to share it with you. I want to provide you with the necessary tools that will allow you to make the right decisions for your financial security. If you need a review of your current long-term care plan or assistance in creating and implementing a plan, I can help.

Southern Pines: 910-692-4444 129 E. Pennsylvania Ave. Southern Pines, NC 28387

Fayetteville: 910-323-5255 2529 Raeford Rd. Fayetteville, NC 28305

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VA Accredited.

For those of us that lived the majority of our lives in the last century, it was a time of true achievement. Man kind’s social, economic and technological accomplishments were unprecedented. According to experts, we achieved more and grew faster during the 20th century, than any other time in the history of man.

Some even propose that we grew more in that last decade of the 20th century than we had in the preceding ninety years.

Depending on exactly when you grew up, it probably seems like only yesterday when you were sitting in the movie theater watching either Buck Rogers, Forbidden Planet, 2001 a Space Odyssey, Star Wars, Inspector Gadget or The Matrix. The predictions of how we would live seemed unrealistic, to say the least. Amusingly enough, when one watches one of these older Sci Fi movies today, we are often amused at how “near sighted” some of the movies actually were in their portrayal of the future. Despite our inability to “Beam me up Scotty” or travel at the speed of light, most of us are experiencing today what we could only dream of yesterday.

Interestingly enough, this technology we all seem to take for granted today, has had an amazing impact on our investments.

Not only the “real time” data that is available to anyone who wants it, but the speed in which information is transmitted, news is made available and inevitably the speed in which fortunes have been made or lost.

While the technologists, planners, engineers and others were dutifully making our consumer electronic and computing dreams come true, there were others that were reexamining the way we invest. More specifi-

WHATʼS OLD IS NEW AND WHATʼS NEW IS WELL, UHM, NEW?

cally, the way we were investing incorrectly or inefficiently. It was at this time, 1952, that a gentleman by the name of Harry Markowitz, first introduced the world to Modern Portfolio Theory, or MPT as it is known today. This was followed up by his book on the subject in 1959. Although we all refer to it as Modern Portfolio Theory, Dr. Markowitz himself referred to it simply as Portfolio Theory. Markowitz believed that there was really nothing Modern about it at all.

In the decades that have followed we have all become familiar with, or at least have heard some or all of the following terms… quantitative models, capital asset pricing model, behavioral economics, efficient market hypothesis, mutual fund separation theorem, marginal conditional stochastic dominance, non-correlated asset class, etc…

Despite the fact that MPT employs the use of such equations as Expected Return,

Portfolio Return Variance, Portfolio Return Volatility and Correlation Coefficient (as described in Dr. Markowitz’s “Efficient Frontier” graph or what is more commonly known as the “Markowitz Bullet”) what it all boils down to is Diversification.

Dr. Markowitz proved, through the use of sophisticated mathematics, that investors were always better off when they diversified their investments. No news there right?

Here’s the catch though. He stipulated that the diversification must be complete and impartial, meaning that the investments, in order to provide optimum returns, MUST be in Non-Correlated Asset Classes. More specifically, you cannot have all of your investments in Stocks or Bonds or both. You should also diversify your investments into Commodities. The more diversified, impartial and unemotional the better.

In further support of the conclusions reached by Mssrs. Markowitz and Lintner, the Chicago Mercantile Exchange (CME)

published a study which stated that portfolios with as much as 20% in managed futures can yield up to 50% more than stock and bond portfolios, while offering comparable risk.

In the decades since it was first proposed, Modern Portfolio Theory’s total acceptance and integration has pretty much been reserved for the likes of Pension Fund Managers and Sophisticated Investors, until now that is. In the years that have proceeded the 2008 meltdown, more and more professionals and investors alike have turned to, and even embraced the practice of MPT. They might not realize that this is what they’re doing. Most simply think they are “Diversifying” their investments. Just like Dr. Markowitz proposed, albeit in a rather scientific manner.

Dean WhitehornPrime Algo Financial910 6038946Dean.whitehorn@primealgo.com

retirement & financial planning | 6

NORTH CAROLINA SENIOR CITIZENS ASSOCIATION Invites You To Attend An

EDUCATIONAL WORKSHOP ON LONG-TERM CARE PLANNING DON’T GO BROKE PAYING FOR NURSING HOME EXPENSES! Protect Your Home and Life Savings from Nursing Home and Assisted Living Expenses.

Workshop Presenter: Jason Sutton, Attorney Elder Care Law Firm (910) 692-4444 129 E. Pennsylvania Ave. Southern Pines, NC 28387 Workshop Date and Times: Wednesday, June 27, 2012 10:00 AM OR 2:00 PM Workshop Location: Hampton Inn and Suites (Behind Best Buy & Starbucks) 200 Columbus Drive (Hwy. 15-501) Aberdeen, NC 28315 28387

The Law Has Dramatically Changed! One of the biggest fears that many people have today is the fear of having their life savings wiped out if they end up needing long-term care. Whether you or a family member is in a crisis or not, it is important that you understand what you can do to protect your hard-earned life savings! Most of the public does not yet realize that the law on asset protection and long-term care planning has recently changed.

North Carolina legislators passed a new law authorizing the North Carolina Long-Term Care Partnership (LTCP) Program. It is extremely important that you know about these changes and how they may affect your long-term care planning. The government will NOT inform you of how to legally protect your life savings or of how to legally reduce or potentially eliminate your long-term care expenses.

Whether you are in good health or bad health, or if you already have a loved one in a nursing home, assisted living facility, or receiving care at home, you should attend this workshop. This information-packed workshop will answer many questions you have about protecting your life savings from the high cost of long-term care expenses. Many people have been able to significantly reduce their long-term care expenses regardless of the value of their estate! Don’t wait any longer to find out about this important information.

Jason Sutton, Attorney

North Carolina Senior Citizens Association is a nonprofit organization chartered by the State of North Carolina in 1977.

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5 Tips for Cutting Debt Brown-bagging will get you only so far. Putting household finances on a firmer footing calls for deeper changes and fresh thinking | by Marilyn Kennedy Melia Thirteen-point-eight trillion dollars is a mighty big sum.Yet, for years, we hardly noticed it. Now it’s commanding our attention.

From 2000 to 2008,Americans doubled the amount of mortgage and consumer debt they held, until it came to $13.8 trillion, according to the U.S. Federal Reserve.You know the rest of the story:The financial world collapsed and frightened consumers got out their calculators to total up their tabs. From the $13.8 trillion peak, households have reduced that debt by half a trillion dollars and counting.

There’s still a long way to go, economists believe, before Americans achieve healthy balance sheets. Consumers have “learned the hard way that being approved for a loan and being able to afford that loan are two very different things,” says Kim McGrigg, community relations manager for nonprofit counseling agency Money Management International, based in Sugar Land,Texas.

Even when the economy is back on track, households should abandon the “everyone is doing it, so it must be OK” spending mentality, McGrigg says.

Instead, families and individuals should focus on their own personal financial security. Does a pile of bills stand between you and financial peace? Here are some new ways to approach making a dent in debt: TRACK WHAT YOU SPEND

You’ve probably heard the conventional wisdom: Just give up your morning latte and you’ll find financial security.

It’s more complicated than that, of course, but insignificant purchases can gobble big sums. Michael Collins, director of the Center for Financial Security at the University of Wisconsin, suggests keeping a list of everything you spend for at least a few weeks. By tracking every purchase, you discover what discretionary purchases can go; devote that sum to debt reduction.

MAKE A BUDGET

Even for those who are discouraged by debt, the word “budget” can spark even more disheartening visions of

denial.

But budgets have the big benefit of ensuring that necessities are paid.

Moreover, there are ways to budget to allow a "yes" to some purchases, says Stuart Vyse, a psychology professor at Connecticut College in New London, Conn., and author of “Going Broke:Why Americans Can’t Hold On To Their Money” (Oxford University Press, 2008).

Vyse keeps two checking accounts. One is dedicated to necessary expenses; a monthly automatic deposit guarantees that money is there to pay the essentials.

Experts advise choosing any system that allows you to separate money for necessities. Of course, it’s important to pay more than mini-

mums due on credit card debt.

Additionally, Ithaca College (Ithaca, N.Y.) consumer psychology expert Michael McCall recommends that you designate some cash for splurges.

Paying for the fun stuff in cash is important, he says, since studies show that we’re more reluctant to spend when we must fork over actual dollars.

guideline on how much mortgage or credit card debt is dangerous, Collins says. But it's not smart to continue to rack up high-interest debt now, intending to pay it off sometime down the road. Older people who carry debt face a daunting challenge simply because they have a shorter time horizon to clear the slate before they retire.

“Your income is going to shrink [in retirement], and if you’re still carrying credit card debt, then you could actually have negative cash flow each month,” warns John Ulzheimer of SmartCredit.com.

While they may plan to extend work, debt-burdened pre-retirees usually must cut spending to the bone.

“Educate yourself,” suggests Barbara Whitehead, co-author of “For A New Thrift: Confronting The Debt Culture” (Broadway Publications, 2008).

Research ways to work down debt and learn how to allocate dollars between savings and debt reduction, she says.

BECOME A RELUCTANT SPENDER

DON’T GROW OLD WITH DEBT

How much of your debt is due to spending on things you thought you must have and now hardly care about?

Instant gratification is responsible for a lot of the debt burden,Vyse says. Moreover, we’re subject to constant temptations.“The world has changed dramatically,“ he says.“In the 1970s, when we went home at night we were out of the marketplace. Now you can go online or shop anytime.”

Before handing off your credit card, ask:“What harm would there be if I don’t buy this right now?”Wait a day and it’s likely you will have forgotten the item that would only add to your debt woes,Vyse says.

Unfortunately, there is no standard

© CTW Features

SET GOALS AND WORK TOWARD THEM

Once you’re on a budget, you’re likely to replace the pleasure that once came with spending with the gratification of seeing debt disappear.

“Specific short-term goals help keep people motivated,” Collins says.

While it may be tempting to pay off debt with the smallest balance first – rewarding, because you see “progress” quickly – focus instead on paying off debt that carries the biggest APR.You’ll save more money in the long term by working down larger, higher-interest debts first.

retirement & financial planning | 8

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How Much Do I Need to Save?

Retirement is supposed to be your golden years.

A time to relax and do all the things you’d like to do. The last thing you want to do is worry about how to afford the lifestyle you’re ready to live.

Many Americans realize the importance of saving for retirement, but knowing exactly how much they need to save is another issue altogether. With all the information available about retirement, it is sometimes difficult to decipher what is appropriate for your specific situation.

One rule of thumb is that retirees will need approximately 80% of their pre-retirement salaries to maintain their lifestyles in retirement. However, depending on your own situation and the type of retirement you hope to have, that number may be higher or lower.

Fortunately, there are several factors that can help you work toward a retirement savings goal.

RETIREMENT AGE The first factor to consider is the age at which you expect to retire. In reality, many people anticipate that they will retire later than they actually do; unexpected issues, such as health problems or workplace changes (downsizing, etc.), tend to stand in their way. Of course, the earlier you retire, the more money you will need to last

throughout retirement. It’s important to prepare for unanticipated occurrences that could force you into an early retirement.

LIFE EXPECTANCY Although you can’t know what the duration of your life will be, there are a few factors that may give you a hint.

You should take into account your family history — how long your relatives have lived and diseases that are common in your family — as well as your own past and present health issues. Also consider that life spans are becoming longer with recent medical developments. More people will be living to age 100, or perhaps even longer.

When calculating how much you need to save, you need to factor in the number of years you will spend in retirement.

FUTURE HEALTH-CARE NEEDS Another factor to consider is the cost of health care. Health-care costs have been rising much faster than general inflation, and fewer employers are offering health benefits to retirees. Long-term care is another con-

CONTINUED ON PAGE 11

Eastman Palmer & Davis Wealth Management Group Bill Eastman, CFP®

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Senior Vice President/Investments Co-Branch Manager

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(910) 246-5352 | (866) 431-1089 125 Fox Hollow Road, Suite 104 Pinehurst, North Carolina 28374

Investment Services Since 1890 Stifel, Nicolaus & Company, Incorporated | Member SIPC and NYSE

retirement & financial planning | 10

sideration. These costs could severely dip into your savings and even result in your filing for bankruptcy if the need for care is prolonged.

Factoring in higher costs for health care during retirement is vital, and you might want to consider purchasing long-term-care insurance to help protect your assets.

LIFESTYLE Another important consideration is your desired retirement lifestyle. Do you want to travel? Are you planning to be involved in philanthropic endeavors? Will you have an expensive country club membership? Are there any hobbies you would like to pursue?

The answers to these questions can help you decide what additional costs your ideal retirement will require.

Many baby boomers expect that they will work part-time in retirement. However, if this is your intention and you find that working longer becomes impossible, you will still need the appropriate funds to support your retirement lifestyle.

INFLATION If you think you have accounted for every possibility when constructing a savings goal but forget this vital component, your savings could be far from sufficient. Inflation has the potential to lower the value of your savings from year to year, significantly reducing your purchasing power over time. It is important for your savings to keep pace with or exceed inflation.

SOCIAL SECURITY Many retirees believe that they can rely on their future Social Security benefits. However, this may not be true for you. The Social Security system is under increasing strain as more baby boomers are retiring and fewer workers are available to pay their benefits. And the reality is that Social Security currently provides only 26% of the total income of Americans aged 65 and older with at least $57,957 in annual household income.1 That leaves 74% to be covered in other ways.

AND THE TOTAL IS… After considering all these factors, you should have a much better idea of how much you need to save for retirement.

For example, let’s assume you believe that you will retire when you are 65 and spend a total of 20 years in retirement, living to age 85. Your annual income is currently $80,000, and you think that 75% of your pre-retirement income ($60,000) will be enough to cover the costs of your ideal retirement, including some travel you intend to do and potential health-care expenses. After factoring in the $12,000 annual Social Security benefit you expect to receive, a $10,000 annual pension from your employer, and 4% potential inflation, you end up with a total retirement savings amount of $760,000.

(For your own situation, you can use a retirement savings calculator from your retirement plan provider or from a financial site on the Internet.)

This hypothetical example is used for illustrative purposes only and does not represent the performance of any specific investment. The estimated total for this hypothetical example may seem daunting. But after determining your retirement savings goal and factoring in how much you have saved already, you may be able to determine how much you need to save each year to reach your destination. The important thing is to come up with a goal and then develop a strategy to help reach it. You don’t want to spend your retirement years wishing you had planned ahead when you had the time.

The sooner you start saving and investing to reach your goal, the closer you will be to realizing your retirement dreams.

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Submitted by Bill Eastman, CFP, Senior Vice President/Investments and Co-Branch Manager of Stifel, Nicolaus & Company, Incorporated, a member of the Securities Investor Protection Corporation (SIPC) and the New York Stock Exchange, Inc. He can be reached by calling (910) 246-5352, or via email at bill.eastman@stifel.com

retirement & financial planning | 11

How to Build a College Fund Parents looking to salt away money for both college and retirement can find themselves caught in a giant tugof-war.

Do you make the sacrifice to fund a child’s college education and worry about retirement later? Or do you assume that you’ll find a way to cover college costs with loans or scholarships and focus on your own future instead?

Gen Tanabe votes for retirement savings first.“The reality is, there is no financial aid for retirement. If you haven’t saved enough, your children may be left to shoulder the cost of your expenses,” says Tanabe, coauthor of “1001 Ways to Pay for College: Practical Strategies to Make Any College Affordable” (SuperCollege, 2011). Students will find a way with aid, jobs and loans, he says.

Others believe maximizing savings now, for both retirement and college, is far preferable to planning a future built on student loans.

“Every dollar [you borrow] will cost you two, on average, by the time you finish paying off a loan,” says Mark Kantrowitz, founder of college-cost resources Finaid.org and Fastweb.com.“When you’re saving, you’re keeping the interest.When you’re borrowing, you’re paying the interest.”

Most experts agree that, if possible, you should save for both, early and often, particularly given the rising cost of tuition.The College Board found that college costs increased 26 percent in the past five years, an average that includes both four-year public and private schools. Parents have not been able to keep up.They were projected to meet just 16 percent of college costs in 2011, down from 24 percent in 2007, according to Fidelity Investments’ fifth annual College Savings Indicator Study, released in August 2011.

But the Fidelity study also found that parents are changing their savings behavior. Some 40 percent of parents with children under age 5 started saving for college costs in a dedicated account, up from 27 percent in 2007. More of them are using a dedicated college savings account like a 529 plan.“Families are planning earlier and saving more efficiently, yet saving for college will continue to be a challenge,” says Joseph Ciccariello, a Fidelity vice president.

Kantrowitz says college savings should begin before or immediately after the birth of a child. But he points out that it is never too late to start saving.

For those who want to figure out how much they might need, Kantrowitz suggests setting a goal of one-third of expected college costs.

“If you focus on the full amount, you’ll feel overwhelmed and you may not even get started,” he says.You should assume that a third of your college

Saving for college? Finding courage to take the first step may be the biggest hurdle | by Patricia Rivera not have to pay state taxes, either.

You can withdraw the money taxfree for educational expenses at any time.This program, however, is best for individuals with modified adjusted gross income of less than $95,000, if single, or $190,000 for those who are married and who file taxes jointly.

expenses will come from savings, a third from future income (such as loans) and the last third from current income, employment and scholarships or aid. Use the cost of tuition the day your child was born as a point of reference.

Start with as little as $100 a month, or whatever is feasible.

“Once you’re in the habit of saving, it’s easier to save more,” Kantrowitz says.

Here are some key ways to invest college funds wisely.

Coverdell Education Savings Account allows families to contribute up to $2,000 per child per year. There are income limits. Like an individual retirement account, a Coverdell account can be invested in stocks, bonds, mutual funds, certificates of deposit or money market funds.

As the money grows, you are allowed to defer paying federal income taxes. In many states you will

State-sponsored 529 college savings plans, available to families of all income levels, offer much higher contribution limits. Investors select from a platter of mutual funds and other investments. Earnings are tax-free as long as the money is used for qualified education expenses.

“Unlike the Coverdell, the money that you invest into a 529 plan must be used for college-related expenses,” Tanabe explains.

While 529 plans have proved popular, returns are not guaranteed.

Declines in the value of 529 plans are unsettling to families, especially when students are nearing college age. States have added more conservative options to the plans, adding FDIC-insured certificates of deposits, savings accounts and age-based accounts that trim back stock investments in favor of less volatile options CONTINUED ON PAGE 13

Learn more about…

Federal student loans at studentaid.ed.gov 529 plans at savingforcollege.com Your financial aid application at fafsa.ed.gov Inspiration for college at college.gov © CTW Features

retirement & financial planning | 12

Pinehurst Medical Clinic as children age.

Investors can change asset allocation in 529 plans just once a year.

You can participate in any state’s 529 savings plan regardless of where you live, although your state’s plan may offer state-tax breaks or other discounts. Buy a 529 either through a financial adviser or directly. Look for: Low expense ratio and other fees.

Determine the annual account maintenance fees, transfer fees and commissions. Investments that are actively managed, such as mutual funds, carry higher fees than index funds.

State benefits. Some plans include state-tax breaks. Others offer matching contributions. Study the options.

Investment options. Look for a plan that gives you a good mix of investment tracks.

Ease of changing account beneficiary. Should your child decide not to attend college, make sure you can change the beneficiary.

Whatever you decide, select an option to automatically transfer money from your checking or savings account to your 529 college savings plan account, Kantrowitz says.

Prepaid 529 college savings plans are the first cousins of 529 plans, Tanabe says.They allow state residents to pay now to lock in prices at a state university.A premium over the current tuition rate is factored in to cover future tuition inflation. Some states have programs that allow families to buy a fixed number of tuition credits at today’s prices.

It’s important to read the fine print on prepaid 529 plans to under-

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Top 529 plans State-sponsored college plans in six states received the highest rating in 2011 from analysts at Morningstar, the Chicago-based investment research firm.

Alaska’s T. Rowe Price CollegeSavings plan The Maryland College Investment Plan, managed by T. Rowe Price Nevada’s Vanguard 529 Savings Plan, managed by Upromise Ohio’s CollegeAdvantage 529 Savings Plan, managed by the Ohio Tuition Trust Authority The Utah Educational Savings Plan Virginia’s CollegeAmerica, managed by American Funds © CTW Features

stand how or if your state will handle a shortfall in the event the plan’s investments do not deliver expected returns. Some states have suspended or closed their plans after financial difficulties.

Rebate programs such as Upromise or Babymint provide those who sign up with rebates that go into a 529 savings plan when you buy certain products – gasoline, clothing, food – from participating companies.

“Again, the most important thing is to start saving, no matter how much it is," says Kantrowitz.“Every little bit helps.”

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retirement & financial planning | 13

Saving and Investing: What Next?

Tough economic times pushed many families to the brink and left others with a fearful question: Have the old rules of saving and investing changed forever? | by Dawn Klingensmith Feeling distrustful of the stock market and insecure about your finances and investments? Financial adviser David Gottlieb sits down with people like you almost every day. Into his Pepper Pike, Ohio, office he welcomes an allAmerican parade of average savers and investors – newlyweds, single moms, families with kids to put through college, couples about to retire – most with a single uneasy question: Has the mortgage industry meltdown, the housing collapse and the rickety economy changed the rules of personal finances and investing? His short answer: No. Gottlieb does suggest that his clients make one radical change:Tune out the headlines.

“I hear the same rant all the time about the president, the economy, the global economy, Greece. People are making decisions based on headlines and emotions,” which costs them in the end, says Gottlieb, a financial adviser for Edward Jones.

Investors were clobbered with massive investment declines in 2008; however, the recession officially ended more than two years ago.Those who stayed the course have done well since 2009, compared with those who yanked money out of the stock market in a panic.

“If anything, the economic climate reinforces basic financial principles,” says Ruth Ann Potts, manager of advanced planning at Country Financial in Bloomington, Ill. The aftermath of the great recession is a good time to review those basics and consider some new approaches, based not on doomsday newscasts but on your individual circumstances and goals.What have we learned since the great fall? A lot.

TAKE A DEEP BREATH AND STAY THE COURSE

The market crisis of 2008 proved that diversification offers no guarantee against losses; however, it tends to reduce the damage. Maintain a diversified, balanced portfolio, Potts advises, and don’t let a market slump change your long-term investment plan. Historically, the market consistently and reliably recovers.A down market may even present an opportunity to add holdings and accelerate your recovery.

But keep in mind that stocks are risky by definition; that’s why they have high expected returns. Just because the market historically recovers does not

401(k) account.“Focus on where you put new contributions,” she says.

Funnel new contributions and investments “into vehicles you’re more comfortable with.”

CONSIDER SAFER INVESTMENTS

mean that your risk vanishes in the long run, no matter how long you hold onto a stock, warns Zvi Bodie, coauthor of “Risk Less and Prosper:Your Guide to Safer Investing” (Wiley, 2011).

Bodie believes that the riskiness of stocks is understated and that many investors have too much allocated to stocks and not enough allocated to safer, inflation-indexed investments.

Risk-averse investors in particular should see how far a low-risk investment strategy will take them, and then make adjustments to meet savings and retirement goals.“For safety and protection against inflation,Treasury Inflation-Protected Securities and U.S. savings bonds called I Savings Bonds are unsurpassed,” says Bodie, a professor of management at Boston University.“Initial investment is guaranteed, and return is paid in inflationadjusted dollars.”

DON’T OVERCORRECT OR UNDER PREPARE

EMBRACE YOUR RISK TOLERANCE

In the wake of the market crisis,“A lot of people realized they don’t have as much tolerance for risk as they thought and are making adjustments,” Potts says.Assessing risk tolerance used to be hypothetical: How will you sleep if your investments drop in value by 10 percent or 50 percent?

Now, it’s real and observable:When the markets crashed, did you buy, hold or sell your stocks?

Because you lock in losses if you unload stocks during a market slump, Potts recommends that risk-averse individuals not make adjustments to investments already tied up in a

Economic collapse made a big impression on young investors.“This painful economic environment has affected the risk appetite of the 20- and CONTINUED ON PAGE 15

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retirement & financial planning | 14

30-something set.At a stage in life where they can most afford to take on additional risk with their retirement savings, huge numbers of young folks are not,” says former portfolio manager and financial literacy advocate Manisha Thakor, of Santa Fe, N.M.“The problem with this is that it sets them on a path to be under-saved for retirement when they hit their 50s and 60s, and thus they may end up taking on too much risk when they can least afford to, where there are fewer years on their side.”

DON’T BE RETIREMENT-RICH AND CASH-POOR

“People are putting money in 401(k)s but not in the bank,” Gottlieb says, adding that investors have somehow gotten the impression they need to retire with a million dollars.

Consumers also have been advised that anytime they come by extra cash, such as a bonus, they should use it all to pay down credit card debt. Gottlieb says to use some or most of it to chip away at your balance, but to keep the rest “just for the sake of having cash again and paying for things in cash instead of feeling broke all the time and charging things.”

Beef up your emergency funds, too.

Having the equivalent of three to six months’ salary or living expenses set aside is still the recommended minimum, Potts says, but high unemployment rates and the struggling economy suggest six to 12 months’ worth might be more prudent.

In addition to an emergency reserve fund, have a “put-and-take” savings account for unexpected day-today expenses like home appliance repairs or occasional splurges, Potts

recommends.

If you are saving for a particular item or event, consider opening a separate “earmarked and untouchable” account just for that:“You almost need to open up different accounts for different savings goals so you won’t touch it.When you put everything in a general account, it gets spent,” says Gottlieb, who has an account designated for his daughter’s bat mitzvah.“I understand people will fight me on this and say [the money] is not making interest. But cash gives you the ability to buy things, not borrow things.

“The rate of return is not the issue," he says. "It’s having money on hand when you need it.”

TREAT EDUCATION AS AN INVESTMENT

Student-loan debt now eclipses credit card debt.“As the price of education has risen and wages have stagnated, it’s no longer a no-brainer that any educational debt is good debt,”Thakor says.“In the current environment, it is essential to step back and think strategically about how much you are paying for an education relative to the earnings you expect as a result.When the return on investment isn’t as high as you’d like, it’s time to think creatively.That may mean living at home while going to school or taking a year or two off before even starting school to live at home, work and save. Or, start at a community college and then transfer to a state school.

“The point is to view education as any other valuable asset and make sure the return justifies the up-front investment.” © CTW Features

retirement & financial planning | 15

Saving for Retirement: The Timeline How to think smarter and plan better for retirement at every stage of life | by Taniesha Robinson Funding retirement is easy. Just ask planner David Schaeffer.“Make all you possibly can. Save all you possibly can.”And, start early. Often, the people asking him for help on the eve of retirement didn’t screw up their investments.“It’s not that they did something wrong. It’s that they never did something,” says the Schaeffer, , a retirement planner with Futurity First Insurance Group in Phoenix.There’s something for folks at every age to learn about saving and investing for retirement. Start here.

IN YOUR 20s

Saving for retirement savings isn’t a hot topic among 20-somethings. But young people develop financial habits and make life decisions that can have lifelong consequences.

“The kind of job you get when you’re young, in your 20s, can have a big impact on your lifetime security,” says Anna Rappaport, a consultant for the Women’s Institute for a Secure Retirement,Washington D.C.“A teacher or a policeman gets into a public pension plan.That’s a lot different from getting into an occupation where there’s likely to not be much benefit.”

Today, expected retirement income from pensions or 401(k) accounts must be coupled with disciplined lifelong personal savings, says Bonnie Sewell, principal financial planner at American Capital Planning,Washington, D.C. “This is the easiest time in your life to save if you don’t buy into an expensive lifestyle,” Sewell says.“Regardless of your age, Tip your focus should be on disciplined saving and less on investments.”

Start early. A It can be difficult for someone who just entered the 25-year-old who saves 15 percent labor force to think about saving for retirement. “If it feels a year is likely to better to call it ‘choices savings’ rather than retirement, do be able to afford that,” Sewell says. Early savings allows more “choices” later to retire at 62. “If on: career changes, marriage, divorce, health issues and you start later, more. you need to save more,” Rappaport The Schaumburg, Ill.-based Actuarial Foundation recsays. ommends people who begin saving in their 20s to put away about 10 percent of their income, a common rule

backed by other financial advisers. If they are able, Sewell and Schaeffer recommend those in their 20s save up to 20 percent of income, which they say is ideal.

every job, career changes are fine,” Rappaport says.

This may be the time a young couple welcomes their first child.When women take a break from work for childbirth and child-rearing they lose immediate income and also lower their lifetime earnings, reducing retirement benefits. Sewell says the wife should propose that half her husband’s savings during that time fund the retirement accounts.

Continue to save in a disciplined fashion, even if investments are growing steadily. Back in the day, an Tip investor could simply pick a Because women tend to live longer, sound allocation they need to save of funds within a more 401(k) and aggressively. “everything would be fine,” Schaeffer says.This is no longer true.

Individuals who begin their retirement savings in their 30s should save around 13 percent of their income, according to The Actuarial Foundation.

IN YOUR 30s

This is the time to eliminate debt and be smart about a home purchase.

“Hopefully, college debt is behind them and the only loans in place are well-managed, auto- and housing-related loans,” says Schaeffer. If your employer does not match a portion of your contributions to a company 401(k) plan, Schaeffer says, it could be worth seeking out one who does.

Job changes and even career changes are common at this stage.“If you enter a defined contribution plan and if you have good savings levels at

IN YOUR 40s

“You should be approaching peak earning years," Schaeffer says.“College may be competing with retirement for your savings dollars. If your lifestyle will allow, save aggressively.”

Home and auto loans, bills and retirement savings alone can cause financial strain during this life stage.

But the addition of college tuition payments can make it unbearable, even for families that have made all the right financial steps thus far.

According to a 2008 study from CONTINUED ON PAGE 17

retirement & financial planning | 16

I

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the National Center on Higher Education and To determine Public Policy, colwhether you’re on lege costs are track in your savings try the AOL’s roughly a third of "Am I Saving the median famiEnough? What ly income for Can I Change?" lower-middlecalculator at class Americans. calculators.aol. com/tools/aol/ The Actuarial retire02a/tool.fcs Foundation advises parents to ask children to help pay for their education with earnings from summer and part-time jobs, scholarships and loans.

“If you make bad decisions on cars and mortgages and college, you’ve shot yourself in the foot,” says financial planner Sewell.

The Actuarial Foundation recommends those who begin saving in their 40s to put away 20 percent of income.

Tip

IN YOUR 50s

It’s time to sock away every nickel.

Ideally, for savers of this age, mortgage costs should be in the range of 10 percent of income, Tip Schaeffer says, and auto costs Learn what your should be low. estimated social security benefit “College costs will be at retireare behind you ment by using the and you are in retirement estimathe 20-year home tor at stretch to retirewww.ssa.gov/ estimator or call ment,” he says.

800.772.1213.

Make “catchup” contributions

to retirement savings now, if necessary. Resist any permanent withdrawal of retirement funds, especially before age 59.5, when early-withdrawal penalties disappear. Most account withdrawals will be taxed.

Individuals who’ve just begun their retirement savings during this life stage need to save around 40 percent of their income, according to the Actuarial Foundation.

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Full Social Security benefits kick in at this time, but it’s not going to be the reward that past generations saw. If retirement savings have been lackluster over the years, there are some rescue options.“There’s no reason that people who haven’t saved enough are doomed to a spartan existence, unless they insist on living in a high-class area or continue to spend at a level that is unsustainable,” Sewell says.

Tip She suggests taking on an Sell assets that are not producing extra job – partmuch income or time may be growth, such as enough – and undeveloped land perhaps creating or a vacation a stream of home, and invest in income-producincome on the ing assets. side from selling something you make or providing a service, from building websites to de-cluttering homes.

Retirees can expect to spend 4 percent of retirement assets annually to stretch savings over their remaining years, Schaeffer says. More than that is a problem.

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retirement & financial planning | 17

Beginnerâ&#x20AC;&#x2122;s Guide to Building a Budget

Erica Sandberg has this simple advice for consumers thinking about creating a HOUSEHOLD BUDGET $ON T FORGET THE SMALL STUFF 4HAT INCLUDES THE MONTHLY manicure, the special holiday bottle of wine, the extra $20 on a birthday lunch for your best friend and that concert youâ&#x20AC;&#x2122;ve been dying to see.And donâ&#x20AC;&#x2122;t forget to consider what might happen: a flat tire, a broken tooth or a speeding ticket. Not figuring in lifeâ&#x20AC;&#x2122;s many little â&#x20AC;&#x201C; and sometimes large â&#x20AC;&#x201C; expenses can derail a budget.

Sandberg, a personal finance expert and author of â&#x20AC;&#x153;Expecting Money:The Essential Financial Plan for New and Growing Familiesâ&#x20AC;? (Kaplan, 2008), says the key to a savvy budget is accounting for everything. â&#x20AC;&#x153;Be extremely comprehensive,â&#x20AC;? she says.â&#x20AC;&#x153;So many people tend to truncate their budgets.They divide their expenses into house, groceries, entertainment.

Thatâ&#x20AC;&#x2122;s not enough categories.Thatâ&#x20AC;&#x2122;s not realistic.â&#x20AC;?

Sandberg believes many consumers overthink a budget.â&#x20AC;&#x153;A budget is just cash flow â&#x20AC;&#x201C; money coming in, money going out. If you think of it that way, itâ&#x20AC;&#x2122;s not so overwhelming.â&#x20AC;?

Consumers who believe that a household budget boxes them in might have designed a plan thatâ&#x20AC;&#x2122;s too inflexible, Sandberg says.â&#x20AC;&#x153;If they feel like they can only spend $300 a month on movies and theater, for example, it makes THEM FEEL DEPRIVED "UT IF THEY REALIZE THEY CAN PULL MONEY FROM THAT ENTERtainment area for, say, new tires for the car, it makes it more flexible.â&#x20AC;?

The key to a successful budget is â&#x20AC;&#x153;a matter of manipulating it so you have money for necessities and things that are important to you,â&#x20AC;? Sandberg says.

Knowing how much money you need and how much you have is paramount for successful budgeting.â&#x20AC;&#x153;Everyone should know off the top of their heads how much they net in a month after taxes.Then, think in terms of 10

A budget is the foundation of a solid financial plan. Hereâ&#x20AC;&#x2122;s an easy, real-world guide to setting one up | by DebAcord

percent,â&#x20AC;? Sandberg says.â&#x20AC;&#x153;Letâ&#x20AC;&#x2122;s say you bring home $2,000. Everybody who is past fifth grade math knows that 10 percent of that is $200 a month.

Try to set that aside. Most people can do it if they try hard enough.â&#x20AC;?

Sandberg suggests people who have credit card balances should try to think of them as loans and attempt to pay them off in six months.Take care of the balances with the highest interest rates first, a tactic that will help save money in the long run.

Budgeting can be painful at first, but Sandberg reminds people that it does get easier. Itâ&#x20AC;&#x2122;s like changing eating habits, she says.â&#x20AC;&#x153;At first, you pay really close attention to calorie counts and statistics. But later, it becomes pretty natural. Itâ&#x20AC;&#x2122;s the same with a budget. Once you get used to living within your prescribed numbers, it becomes a part of you.â&#x20AC;?

Here, tips for budgeting, from both finance expert Sandberg and the Federal Trade Commission: s $ETERMINE HOW MUCH MONEY you bring home each month. Include all income â&#x20AC;&#x201C; from your job, gifts, tax refunds, unemployment or other government assistance, alimony or child support, pensions, Social Security and profits from sales of used goods. s $ECIDE HOW TO KEEP TRACK OF your finances.You can choose from phone apps, computer software or good old-fashioned paper and pencil. $ECIDE WHAT S MOST COMFORTABLE s ,IST HOW MUCH GOES INTO A SAVings account each month.The easiest to remember: 10 percent of your take-home income. s ,IST ALL PREDICTABLE MONTHLY expenses â&#x20AC;&#x201C; those that tend not to change, including rent or mortgage, a car payment, telephone, cable and Internet.

s ,IST MONTHLY EXPENSES THAT CAN vary â&#x20AC;&#x201C; utilities, personal grooming, property taxes, insurance, gas and groceries. s ,IST OCCASIONAL EXPENSES FOR things like manicures, getting your eyebrows waxed, office supplies, holiday gifts or entertainment. s !DD UP FIXED AND VARIABLE expenses and divide by 12 for a monthly estimate. s )F YOU END UP WITH EXTRA MONEY

carry it over in a savings account for the next month. If you have credit card balances, pay them first instead of building a savings account. Having a savings balance and a credit balance can give you a false sense of financial security. s "E FLEXIBLE )F SOMETHING UNEXpected comes up, such as un-reimbursed medical bills, take care of them by finding other places you can cut. s 2EALIZE THAT ONCE YOU GET USED to budgeting, it will become second nature. Š CTW Features

Learn more aboutâ&#x20AC;Ś Managing your money at ftc.gov (select Consumer Protection and look for Money Matters, under Whatâ&#x20AC;&#x2122;s New) Making smart money decisions at extension.org/personal_ finance Setting up a template for your budget office.microsoft.com/ en-us/templates (search â&#x20AC;&#x153;home budgetsâ&#x20AC;?)

Managing money online at mint.com Š CTW Features

retirement & financial planning | 18

Retirement Living: Should We Stay or Should We Go?

As they near retirement, it's the question all boomers are asking |

As more baby boomers reach their 60s and start to ponder retirement, many begin to debate where they should spend their golden years.

Highly educated and active, boomers aren’t following in the footsteps of their parents, many of whom migrated to warm-weather destinations. Stories of older relatives and friends who fell ill far away from loved ones or become lonely after the excitement of a new destination dimmed that dream of retirement.

In addition, the boomer generation - those born between 1946 and 1964 - is highly diverse and no single solution appeals to them all, says Carol Orsborn, author and co-founder of Fleishman-Hillard’s boomer-focused practice, FH Boom.

The prime destinations seem to be communities close to home with residents who vary in age - where boomers can continue to feel young and maintain friendships - and downtown urban centers, where they can make do with less space and fewer cars, all while staying close to hospitals, a host of restaurants, shops and cultural events.

Ann Fry, a life coach and speaker who focuses on reinvention, is a prime example of this trend. When she hit 60, she relocated to New York from Austin, Texas. Fry decided to rent initially, explaining “I love it, being able to call the super and say, ‘Fix this’.”

Boomers contemplating retirement choose one of two main paths: find a location close to home, or move to a new location that’s closer to family or that offers longed-for social, cultural or natural amenities.

STAY CLOSE TO HOME Because relationships are so important to this generation, many choose to stay within the same community, Orsborn says. In fact, most of those who move into Dublin, Ohio-based Epcon Communities’ various boomer-geared

Danielle Cadet

2. Are you up for the upheaval?

Redecorating, remodeling and moving all require time, money and patience, and typically add to stress levels. “Ask yourself whether you have the stomach to go through a remodeling or move,” suggests Laura Meyer, co-author of “Remodel This!” (Perigee, 2007). Some older homeowners tolerate stress better since they’re not dealing with young children.

3. Are you ready to cut the umbilical cord?

People become attached to their homes, Meyer says. “Are you really ready to leave?” she asks.

4. Will you continue to have a good support system where you are or where you go?

It may be your children or a good network of friends, but you need to know that you have people you can rely on, says Ann A. Fishman, president of Generational-Targeted Marketing Corp., New York. Even if you move to be closer to children, realize they may not always stay there. developments come from a 7-to-10-mile radius, says Nanette Overly, vice president of sales and marketing. But if they stay put in their own home, many opt to redecorate or remodel so it’s more convenient for their empty-nest years.

Others downsize to a smaller home or condo to cut expenses and upkeep. And still others upgrade to have more room for kids and grandkids.

With so many options, it’s not surprising that the easiest solution for many is to stay put.

Nevertheless, the visibility and affluence of this generation has given rise to experts from different disciplines who have lots of advice to share on how boomers - and anyone debating what to do - can be better prepared. Here are nine questions experts suggest boomers ask themselves to make the smartest, happiest move:

FIND A MORE APPEALING LOCALE All sorts of reason spur boomers to move from wanting to be closer to children, live in a different climate, find a state with lower costs of living and estate taxes, or to simply have a new adventure in a new community. They also look for a variety of housing stock, from singlefamily homes to condos and retirement villages.

1. What are your goals?

Before you focus on the type of house you seek, think about your big-picture goal, whether it’s to be closer to your children and grandchildren or even farther away, says Marion Somers, the nationally recognized geriatric care manager and author of “Elder Care Made Easier” (Addicus Books, 2006).

5. Will you be with like-minded folks?

Boomers are social and like to be surrounded by a people of varied ages, says Fishman. One solution for some boomers is to share a condo or house. Smart development companies are building communities targeted at homeowners with like-minded interests, Overly says.

6. What type of house and community makes the most sense?

Boomers need to carefully weigh their housing choice and what level of services they want, based on realistic factors such as health and not just pipe dreams, Somers says. They also need to be sure their setting offers the right amenities. For those not sure, Somers has them answer questions, talk about possibilities, and put down responses on paper.

retirement & financial planning | 19 CONTINUED ON PAGE 20

RETIREMENT COMMUNITIES

7. When is your decision going to be made?

Somers has clients determine a timetable rather than put it off indefinitely.

8. Can you afford your decision?

Too many boomers don’t know how much money they need to age, Fishman says. They need to take into account state and estate taxes and the cost of daily living, including housing, health care and entertainment costs, she says.

You also have to take into account any possible income changes.

Banish the phrase “old folks home” from your vocabulary. Retirement living options have never been more varied. Among them:

AGE-RESTRICTED COMMUNITIES

Great for people interested in living amongst their peers, these communities have a mix of housing types and feature amenities like tennis courts and golf courses.

9. Have you tried out your decision?

It’s hard to test-drive a decision without owning a home, but The North Carolina Center for Creative Retirement, part of the University of North Carolina at Asheville, offers seminars and a Creative Retirement Exploration Weekend program. Many communities may offer similar programs.

ASSISTED LIVING

These residences provide apartment-style living and offer personal care and support services with basic daily activities ranging anywhere from bathing and dressing assistance to medication management. Communities also include meals, housekeeping, activities, transportation and varying levels of security.

CO-HOUSING

COLLEGE TOWN RETIREMENT COMMUNITIES

Ideal for anyone seeking a more youthful environment, these communities include varying forms of independent off-campus housing while providing access to university facilities and programs

In co-housing communities, residents actively participate in the design and operation of the neighborhood. Each home is privately owned and decisions are made cooperatively. Residents often share the cost of health aides or an on-site healthcare provider.

NATURALLY OCCURRING COMMUNITIES

NORCs are a response to retirees who want to remain in their homes for as long as possible. Essential services are pooled so that maintenance, transportation, eldercare, shopping and other basics are readily available to the community s seniors.

SUSTAINABLE COMMUNITIES For seniors who want to live green into their old age, these communities promote conscious living practices in every aspect from the neighborhood building materials to waste disposal.

Sources: Co-Housing Association of the United States; Campus Continuum; NORC; Ecovillage Network of the Americas

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On the Way to a Financial Plan Odds are, you say you have one, but you don’t.

Why your family needs a financial plan | by Dan Rafter With the economy in turmoil, there’s rarely been a more important time for families to draft a detailed financial plan. Such a plan, including strategies for achieving big life milestones (education, buying a home and retirement), saving, investing and dealing with inevitable setbacks, can help steer families through challenging times.

Few of us are prepared. Some 79 percent of people claim to have a financial plan, according to a 2011 survey by the Certified Financial Planner Board of Standards, but this number is misleading. Nearly half of those with a plan, 46 percent, say that it exists only in their heads; 11 percent say they only have written down some notes or ideas, not a complete plan.

Financial planner Simon Singer says too many families spend more time planning a vacation than they do making decisions about their life’s finances.A financial plan, like a vacation, requires setting a destination and establishing an itinerary.“You need to know where you are going and how you’re going to get there,” says Singer, founder of Advisor Consulting Group, Los Angeles.

Families need to know where they stand financially, even if their finances

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are in disarray. Doug Hendee, certified financial planner for Brighton Securities, Rochester, N.Y., sees many families who ignore financial troubles in hopes they’ll simply disappear.

“So many people are embarrassed to look at their finances,” Hendee says.

“But ignorance in this case is not bliss. How will you know what you need to do if you don’t take a look at your financial situation to figure out where you stand?

The good news is that crafting a financial plan doesn’t have to be an unpleasant chore.

The most important part of any financial plan also is the simplest: a budget.

A budget should take into account the money a family brings into the household each month. It also should list all of a family’s expenses.These should be divided into two main categories. Fixed expenses are those that don’t change from month to month: insurance payments, mortgage payments, student loans.Then there are discretionary or charges that fluctuate month to month, including utility bills, gas, entertainment spending and groceries.

“Families need to know where their money is coming from and where it is going,” says Nancy Skeans, partner with Schneider Downs Wealth Management Advisors in Pittsburgh.

“If they don’t understand that, it’s almost impossible for them to understand how much they can save and where they can cut expenses.”

Families shouldn’t focus too much on the small details of a financial plan, Hendee says.What’s most important is that they start putting together a financial plan as soon as possible, even if it’s not yet complete.

In Search of a Financial Adviser The key to finding the right investment services provider is asking the right questions – both of yourself and of prospective providers. Following are some questions from the Coalition for Investor Education, a group of state securities regulators, consumer advocates and financial planning and investment advisers, to help you identify the right provider for you.

Remember, there are no foolish questions. Any reputable provider should be happy to discuss these issues with you and answer any questions you may have.

Do you need help developing strategies to reach your financial goals or do you simply want suggestions on appropriate investment products to implement your goals?

Do you prefer working with someone who is primarily considered a salesperson, an adviser or a combination of the two?

Do you prefer paying for investment services through a fee, commissions, a percentage of assets in your account or a combination of these?

How important is it to you that your provider have a legal obligation to act in your best interests and disclose potential conflicts of interest?

How involved do you want to be in decisions about your specific investments?

Do you want assistance with a few targeted areas, or do you need a comprehensive plan for your finances?

Do you already have a portfolio of investments you would like help managing?

© CTW Features

© CTW Features

retirement & financial planning | 21

Retirement Retrofit

The American dream of owning a house is rooted in the ideas of financial success and independence.

Now, as more Americans hit retirement age and worry about accessibility of their homes, the concept of independence is taking center stage.

Remodeling for aging homeowners has become an important industry, and contractors and designers are helping the elderly envision homes that are both comfortable and feasible for the future.According to

Seniors remodeling for an accessible home need to balance comfort, safety and resale value | Dan Rafter

MetLifeâ&#x20AC;&#x2122;s 2010 Aging in Place 2.0 report, 80 percent of U.S. residents over the age of 45 want to remain in their existing homes even if they need medical assistance. The MetLife report also cites a 2007 study by Clarity saying that 26 percent of older people fear losing their independence as they age.

These homeowners face a difficult challenge in balancing the need to remodel their homes for safety without creating residences that will alienate future buyers.

FORWARD THINKING

Half the battle is knowing the perils of re-

CONTINUED ON PAGE 23

retirement & financial planning | 22

sale value before even planning a remodel.

Anita Lang, a principal with IMI Design in popular retirement town Scottsdale, Ariz., has problem-solved for clients stuck in this position.

Lang recently designed a huge walk-in shower in the master bathroom that would make life easier for her clients as they aged.

But the shower’s size left no room for a bathtub, something that could hurt resale when it came time to sell.

To skirt that problem, Lang made sure that the shower design would make it easy for future owners to modify it to create space for a bathtub.

“It’s important to do what you can to make your home safe and friendly as you get older. But you don’t want to go to such extreme lengths that it makes it hard to resell your home,” Lang says. “You don’t want to overcustomize your home.”

CHANGES, BIG AND SMALL

Architect Duo Dickson, author of “Staying Put: Remodeling Your House to Get the Home you Want” (Taunton Press, 2011), says that homeowners look at the process in different levels, from easy and inexpensive to time-consuming and pricey.

The first steps are the easiest ones, and will have the smallest impact on resale value.

These include widening interior doorways so that they measure at least 10 feet across, adding small ramps between rooms that rise or fall and making sure that bathrooms, kitchens and hallways are wide enough for wheelchair access.

Homeowners can take a bigger step by creating an entire suite that is handicapped accessible, Dickinson says. This involves enlarging bathrooms, kitchens and bedrooms.

It also means installing grab bars, bumping out walls to add more space to rooms and even installing elevators in those homes in which first-floor bedrooms aren’t an

option.

These changes, though, can make future buyers hesitate, especially when they calculate the cost of removing elevator shafts or relocating master bedrooms to a home’s second floor.

COMFORT FIRST

Dickinson observes that more owners are siding with the “comfortable and safe” factor today and agreeing to worry about resale later.

“People are viewing their homes as permanent assets, versus just stepping stones for something better,” Dickinson says.

“People are also acknowledging the fact that they are living so much longer. They want their homes to be comfortable as they age.”

BEST OF BOTH WORLDS

Not all major remodels will be doubleedged swords. Dickinson worked with a couple in their 50s, who spent thousands of dollars to convert an old two-level kitchen into a modern one-level version. It was a costly project, but one that will keep their home functional as they age and make the home more attractive to future buyers.

Bill Golden, a real estate agent with Atlanta’s RE/MAX Metro Atlanta Cityside, added that retirees should make sure that any home remodel will not only make their homes safer, but more enjoyable, too. He recommends, for instance, that owners with grandchildren include a kid-friendly space for when their grandkids visit.

“Consider the type of living you do now and what you expect to do in the future,” Golden says. “If you know that you’ll want to enjoy being outdoors as much as possible, concentrate on usable outdoor space such as a screen porch. If you have a particular hobby that you enjoy, make sure the space will accommodate whatever needs that may require.”

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retirement & financial planning | 23

PARKVIEW IN-HOME AIDE SERVICE, INC. Forty Years Experience in Quality Health Care • Serving Lee, Moore, Harnett, Chatham,

Senior Citizens Organization to Give Workshop on Long-Term Care Planning

The North Carolina Senior Citizens Association will present a free educational workshop on options and strategies to protect your life savings from nursing home and assisted living expenses at the Hampton Inn and Suites in Aberdeen on Wednesday, June 27.

The law has dramatically changed on long-term care planning. North Carolina legislators passed a new law authorizing the North Carolina Long-Term Care Partnership Program. It is important to learn about these changes and how they will affect your long-term care planning. This workshop is designed not only for healthy people and for people with serious health conditions, but also for people who have a family member already receiving care in a nursing home, assisted living facility or at home.

One of the biggest fears many people have today is the fear of having their life savings wiped out if they end up needing long-term care. Medicare and Medicare supplement policies don’t cover long-term care expenses. With the average cost for nursing home care exceeding $7,000 per month in the US last year, it is important to know where to go for the right answers. Whether you or a family member is in a crisis or not, it is important to understand what you can do to protect your hard-earned life savings.

Moore County attorney Jason Sutton, a member of the North Carolina Bar Association and the National Academy of Elder Law Attorneys (NAELA), will present the workshop. “All too often, we hear stories of families draining their life savings, selling off a loved one’s home, farm, investments and other assets, and then applying for fi-

nancial assistance from the Medicaid or Veterans Administration programs. This process is unnecessary. With sound information and the right legal strategies, it is possible to qualify for financial assistance for long-term care without having to exhaust your life savings,” said Sutton.

Other topics on the agenda include: avoiding some common mistakes people make when a loved one is already in a nursing home; the proper way to gift money to your children to protect eligibility for financial assistance; living trust issues; qualifying for veterans’ benefits; and what to do if a loved one is already diagnosed with Alzheimer’s disease, dementia or multiple sclerosis.

The workshop will be held on Wednesday, June 27 at the Hampton Inn and Suites (behind Best Buy and Starbucks) on Hwy 15/501 in Aberdeen. Participants can attend either the morning or afternoon workshop at 10:00 am or 2:00 pm. Seating is limited and reservations are on a first come, first served basis. Call the reservation hotline any time at 1-800-622-8686.

The North Carolina Senior Citizens Association (NCSCA) is a non-profit organization established in 1977 by the state of North Carolina. NCSCA’s mission is building a better quality of life for senior citizens in North Carolina. For further information, please contact Barbara Maxwell at 1-800-323-6525.

For more information please contact: Barbara Maxwell, Administrative Asst.

North Carolina Senior Citizens Association 800-323-6525 Ext. 30 or 910-323-3641

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retirement & financial planning | 24

Simple means to saving money

If the ongoing recession has taught people anything, it's the need for saving money. Many people were caught off guard by the recession, and studies have shown just how little men and women had saved before the bottom fell out on the economy.

In a 2011 poll from the National Foundation for Credit Counseling, 64 percent of respondents admitted they would not be able to rely on their savings account if a $1,000 unplanned expense suddenly popped up. And the problem of not saving enough is not exclusive to Americans. A 2011 survey from the Canadian Payroll Association indicated that 57 percent of the nearly 2,100 respondents admitted they would be in financial trouble if their pay was delayed by just one week, while 40 percent expect to delay their retirement due to lack of savings.

Such figures should be enough to motivate men and women to start saving, not only for retirement but for an unforeseen event like a layoff that could put finances in serious jeopardy. There are ways men and women can save money that don't require too much sacrifice. * Pay extra each month on loans. If paying extra money each month sounds like an odd way to save money, keep in mind that paying ahead on loans can substantially reduce the amount of interest that accrues over the course of the loan. Some loan agreements include prepayment penalties that actually penalize customers for paying ahead. But if the loan agreement has no such penalties, sending a little extra each month reduces the loan's principle faster, meaning borrowers will pay less in interest and pay off their loans faster. * Re-examine existing insurance policies. An insurance company is not liable to call you and offer lower rates. However, a consumer often finds his or her company is willing to lower rates for those who initiate the conversation.

For example, motorists who have gone a significant amount of time since their last speeding ticket or traffic accident can often

renegotiate their auto insurance policies and earn a lower rate. Some companies will automatically lower these rates, while others need some prodding. Oftentimes, the threat of cancellation is enough to motivate a company to reduce insurance costs. But policy holders won't know unless they try. If the company claims there's no wiggle room, start shopping around for a new company, and don't hesitate to jump on a more affordable policy, even if it can be a hassle to change companies and policies.

Another thing to consider when examining insurance policies if the level coverage is still necessary. For instance, men and women who opened an auto policy when their car was brand new might not want full coverage now that the car has gotten older. Reducing coverage can save significant amounts of money. * Contact your credit card provider. Credit card holders in good standing almost always have the means to saving money at their disposal. That's because the credit card company will likely be willing to lower your interest rate if you are a customer in good standing. Lowering the interest rate can save card holders significant amounts of money, but it's still ideal for card holders to pay off their balances each month and avoid interest accruing in the first place.

When speaking with a representative of your credit card company, discuss any additional benefits the company might provide. For example, some cards have an incentive program that provides cash back on qualifying purchases, which might include groceries or airline tickets. If your card offers such incentives, take full advantage of them, just be sure to pay off the balance in full each month.

Saving money is something many people insist they will start doing tomorrow. But it's the little changes you make today that can add up to significant savings down the road.

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retirement & financial planning | 26

Delaying retirement has financial, social benefits

The need to save for retirement is something professionals start hearing about from the moment they begin their careers. Whether it's parents extolling the virtues of retirement plans or employers who encourage their employees to take advantage of their retirement programs, saving for retirement is never far from the minds of professionals.

As important as such savings can be, many workers are deciding to delay their retirements. As much as men and women envision retiring to a faraway seaside villa for their golden years, such retirements are not terribly common, and many older workers have begun to recognize the economic and social benefits of delaying retirement. Those undecided about when they want to say goodbye to the office should consider the following benefits to delaying retirement.

* Fewer years to worry about financing your lifestyle.

Thanks to advancements in medicine and more and more people living healthier lifestyles, men and women are now living longer than in years past. While living longer, healthier lives is a plus, it does have an effect on retirement.

Because people can now expect to live longer, they must ensure their money lasts long enough. By delaying retirement, men and women will have fewer retirement years to finance.

* More chances to save money. It might be your dream to retire early, but you could be doing yourself a great disservice by ending your career prematurely. Men and women at or near the end of their careers are often making more money than they ever have, which enables them to save more than they have in

Four Powerful Steps for the Life of Your Dreams

the past, especially if children are full grown and supporting themselves. Take advantage of these high-salary years, even if it means working an extra few years. If you do, when you retire you could have substantially more in savings than you would have had you retired early.

Is your dream to start your own business, send your child to college, or simply afford a comfortable retirement?

Our powerful four-tiered approach to holistic life planning can help you continue living the life of your dreams, or can help you get there if you are still in your journey.

* Stay socially active. In addition to economic benefits, delaying retirement has social benefits as well. Many people get the bulk of their social interaction with colleagues and coworkers. When men and women retire, these opportunities for social interaction can dwindle rather quickly, and it's not uncommon for retirees to battle feelings of isolation.

Delaying retirement allows you to easily maintain contact with friends and colleagues, and can lead to a better quality of life.

* The chance to give back.

Many older professionals view retirement as being put out to pasture, where their years or experience aren't utilized.

However, individuals who delay retirement can use their extra years around the office as an opportunity to leave a legacy for the next generation.

This is something professionals find especially valuable as their retirement draws nearer and they want to leave a lasting mark, be it on their company, within their industry or in the community in which their company operates. Delaying retirement provides more time to build this legacy, and can create a greater sense of fulfillment when men and women do decide to retire.

Delaying retirement is growing increasingly popular. Men and women often see it as a chance to build a bigger nest egg and leave a more lasting legacy within their company and community.

1. Discovery This is where we identify what drives you.

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Audra Webb McLean, CFP짜 Financial Advisor, LPL Financial 205 SE Broad St Southern Pines, NC 28387 910 246 0838 office 910 692 7501 fax audra.mclean@lpl.com Securities are offered through LPL Financial, Member FINRA/SIPC

retirement & financial planning | 27

How to manage personal debt

As if anyone needs their memory jogged, debt is a substantial problem for men and women living in fully developed countries.

Estimates vary, but numerous surveys have indicated the average American household has more than $10,000 in credit card debt, a figure that doesn't include debt such as mortgages, car loans or student loans. In Canada, an early 2011 report from the Vanier Institute of the Family suggested the debt-to-income ratio for the average Canadian family was 150 percent, which means that for every $1,000 a Canadian family

earns, it owes $1,500.

What these figures illustrate is that even the most financially savvy debtor may be in a precarious position, one that, should an unforeseen layoff or medical emergency occur, could turn disastrous in a relatively short period of time. As a result, an individual's ability to manage personal debt is of paramount importance, and the following tips can help men and women walking a financial tightrope address their debt in a way that might help them get back on their financial feet.

* Eliminate bad debt.

Not all debt is bad, but credit card debt is CONTINUED ON PAGE 29

retirement & financial planning | 28

Autumn Care

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rarely good. Card holders with substantial credit card debt should contact their companies as soon as possible to see if the company is willing to work with them on a repayment plan. This is more prudent than declaring for bankruptcy, which will negatively impact an individual's credit score for years to come. Companies are often willing to work with card holders about repayment plans that make it easier to pay down debt. But once an agreement is made, card holders must make meeting the terms of that agreement their top priority.

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* Stop accruing bad debt.

Using a card wisely is the key to avoiding unnecessary debt. When using credit cards, do not use them for everyday purchases like groceries or movie tickets. This type of credit card usage is habit forming, and it's very easy for card holders to quickly amass a large balance on their accounts for items they could just as easily could have paid for with cash. Keep in mind interest will be charged on all balances not paid in full each month, so don't make that cup of coffee or that pair of movie tickets cost even more by adding interest to the overall cost.

* Pay down high-interest debts first.

Always work to pay down high-interest debt first while paying a little more than the minimum on low-interest debt. If a car loan came with an especially high interest rate (hint: borrowers whose down payment on a car loan was small or nonexistent are likely saddled with a high-interest loan), work to pay down that balance as much as possible.

Something as simple as paying an extra $25 per month on a $200 per month car payment can reduce the length of time it takes to pay off that loan considerably. Once a high-interest debt is paid off, move on to the debt with the next highest interest rate.

* Stop paying the bare minimum.

Paying just the minimum will barely cover

the interest. That means the principal will hardly disappear, and the debt will be a seemingly impossible obstacle to overcome.

Pay more than the bare minimum each month, even if it means making sacrifices elsewhere.

* Avoid borrowing from Peter to pay Paul.

Transferring balances from a high-interest card to a low-interest card is one thing, but borrowing against property or a retirement savings account is playing with fire. With regards to borrowing against a 401(k), the penalty to do so, not to mention the extra income tax such a withdrawal will accrue, before retirement is substantial. In addition, the value of those retirement savings will suffer considerably as the interest earned will be on that much less money until the full amount is paid back to the account.

retirement & financial planning | 29

You Could Be Here

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