The SC deferred compensation plan offers its members a variety of investment options but make sure you evaluate your options, before you allocate your money across the funds.
If you donâ€™t want to allocate your funds on your own, the plan offers access to target date funds for instant allocation.Â The SSgA Target Retirement funds diversify across several asset classes and allocation is based on your target retirement date.Â You want to check the asset allocation or mix of bonds versus equities to make sure you are comfortable with the overall exposure to the market. Note too that this changes with time. The glide path moves you into more bonds and cash as you approach retirement.
On the equityÂ side (stocks mutual funds) Â you can choose from popular fund families such as American Funds, Dodge & Cox, and T Rowe Price, and Vanguard.Â Â You can even choose to â€śself-directâ€ť your funds in a Schwab brokerage account.
The choices become a bit more complex on the bond side. Â Most investors are concerned about interest rate increases and how they might affect bond returns.Â In addition, they want high yields but want a â€śsafeâ€ť income source.Â The search for relatively safe income in this current low interest environment has been tough. Â For perspective, most â€śhigh yieldâ€ť savings accounts are yielding less than 1% a year and 4 year CDs have an annual yield of about 1.3%.Â These are both FDIC insured up to $250K per registrant and will not incur losses should interest rates rise. Â Their share price is fixed at $1/share.
The SC Deferred Compensation plan offers some interesting alternatives to bonds, but be careful which fund you select.Â The Post 2009 Certificate Fund offers FDIC insured certificates (CDs) that are 7 years in length. Currently, if you choose this option, you will have a 1.75% yield locked in for the next 7 years.Â (This rate changes on a quarterly basis but each certificate is 7 years in duration from the date purchased).
One of the most important aspects of retirement is traveling.Â It is a number one priority for most of my clients and they often have very ambitious plans.Â As part of my exercise to better understand client bucket lists and goals I have them list the things they want to see, do, and experience before they die.Â Some common responses include travel to all the continents, visit all of the state parks in the US, spend a month each year in Europe, and travel in an RV around the country. Some of the more exotic destinations that they want to explore are Bora Bora, Fiji, and the Galapagos islands.Â
As people prepare for retirement, they need to put together a realistic assessment and estimate of annual travel costs.Â Â Travel expenses of $20K a year have a far different impact on your yearly cash flow than $7K a yearâ€”and cash flow is king in retirement!Â A $10K increase in spending can make a huge difference in whether or not you will outlive your funds during your lifetime.Â Thus, it is essential to be realistic about your goals, but also to try to save money on your travel pursuits.Â Here are some tips and considerations for cutting your travel costs.
I loved this article by Robert Laura as it reflects what I continue to see in my financial planning practice. Â The idea of retirement can seem very enticing. Â We long for an unstructured day with plenty of time for hobbies, Â relaxation, and travel. Â But many of us take for granted the social and intellectual stimulation we gain from being employed.
Women and Retirement â€“Does Your Husbandâ€™s Decision to Retire Early Complicate Your Retirement Planning?
Retirement planning can be more complex for women for various reasons.Â Women live longer, take time away from work to care for their parents or children, and are often paid less than their male counterparts.Â
To compound matters further, Â many married men are deciding to retire much earlier than originally anticipated. Â A husbandâ€™s early retirement can have profound effects on a womanâ€™s ability to fund her retirement throughout her lifetime.Â With careful planning, however, these issues can be successfully navigated to provide peace of mind that the couple will have adequate funds.
It takes us years to build up our financial resources for retirement.Â We target a monetary goal for retirement and invest accordingly, but what about our vision of retirement?Â How do we make sure that we are on the same page with our spouse with regard to a common vision of our lifestyle in retirement?
A recent study by Fidelity investments indicated that approximately 4 out of 10 couples not yet retired are in disagreement about their lifestyle in retirement.Â One out of three disagreed about the overall vision of retirement.Â Â
President Obama has announced a new savings initiative geared towards low and middle income Americans called the myRA.Â This new retirement account is available to workers who do not have access to an employer sponsored retirement plan.