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Wednesday, May 31, 2017

Financial Resilience: Part 2 of 3

Resilience (noun): the capacity to recover quickly from difficulties; toughness.

In Part 1, we outlined individual resilience and the opportunities to protect our finances from the known and unknown risks of the future. For Part 2 of our series, we will be focusing on family resilience. Where before we had discussed the different threats to our individual financial well-being, we’ll expand our view to consider the implications on our household, as well as our capacity to impact the prosperity of other generations in our family.

Dual Incomes: The second half of the 20th century witnessed an incredible expansion of productivity in the US with the entrance of millions of women into the workforce. Since, the 1950’s nominal household income has skyrocketed. Now becoming the norm, two income households also are subject to their own risks. If a family depends on two incomes, the risk of job loss doubles with two working parents. The margin between income and outgo, as well as an adequate emergency fund, becomes imperative.

Financial Education: One of the most impactful gifts we can leave to our children is a solid understanding of how finances work. Setting and sticking to a budget, critically evaluating advertisements, entrepreneurship, and an understanding of how to succeed in the workplace are all essential skills often neglected during our formal education. To help ensure the continued prosperity of younger generations, parents can facilitate mentorships or use their own advisors to educate their children.

Sandwich Generation: As the concept of “retirement” continues to evolve, there has been an increasing experience of couples in their prime earning years being responsible for launching their adult children while beginning to care for their aging parents. This results in three growing commitments between children, parents, and career. By equipping and educating children early, and clarifying needs and wishes of parents, couples can see improved prosperity, resilience, and relationships during these years.

Multi-generational wealth: With a focus on values and education, a commitment to communication, and a long-term vision, families can create prosperity and resilience not only for themselves, but for generations that follow. By investing in family members over time, one of the greatest joys of financial planning is leaving an inheritance that extends beyond what is outlined in an estate plan.
In families, resilience is not just about meeting the financial obligations of a household. The objectives ought to be arranged around empowering each generation and passing down the means to succeed as markets and economies as professions continue to evolve.

Geoffrey Sadek, CFP®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Friday, May 5, 2017

Saving For Retirement in Your Twenties

"It seems like an impossible task."  "I don’t have a pension like my grandpa did." "$2,000,000 needed to retire, no way!"  "Besides, who wants to think about being done working when you’re just starting?" These are some of the comments spoken daily by 20-somethings when it comes to retirement planning. So how does a recent college graduate with a couple hundred dollars in the bank start to make a dent in the almost insurmountable task of saving enough for retirement? 

The Grand Rapids Press had a great article giving some simple, yet effective tips for getting started.  The simple solution: Start small, spend wisely, and make it easy to save. The simpler and more automatic saving is, the easier it will be to increase those amounts down the road. Set up good habits early, stay diligent in your savings, and before you know it you’ll be on your way to a happy and lucrative retirement!
Ryan P. Smith, ChFC®, CASL, CFP®
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.