Turbo Charge Your Retirement

Q:Hey, Credit Union Guy, I'm in my 40s and haven't saved nearly enough to prepare for retirement. How can I 'turbo-charge' my retirement savings to catch up?

 A: The good news is that you still have a lot of peak earning years ahead of you. Many people don't hit their professional stride until they reach their 40s, 50s and 60s, and they have their best earning years, by far, late in life. If you qualify for a traditional pension, so much the better, because many systems use your highest-paying three or five years to calculate your benefits. These traditional pensions, however, are getting quite rare.

   

The bad news is this: Interest rates are at or near record lows. That's great for borrowers, but it makes things a lot harder on savers. Chances are, you will need to save a lot more money to generate a given level of retirement income than your forebears did a generation or two ago.

Here are some ideas: 

Rein in spending sharply. Learn to enjoy cooking, rather than eating out. Cut back on cable TV packages and take up exercise instead. The lower your monthly expenses, the more free cash flow you will have available to invest. All solutions to your problem start with this one step.

  

Pay down consumer debt and credit card debt. With credit card interest rates in the high 20s for some people, this is often the very best return on your investment you can get. Every dollar you pay down in credit card debt sooner or later nets you a return on investment equal to the interest rate on the card - with no risk, and no taxes due. Pay it off early and keep your future dollars.

  

Next, make sure you are making the most of your tax-advantaged retirement savings opportunities. Are you working for someone else? Increase your 401(k) contributions. Maximize your IRA or Roth IRA contributions if you are eligible.

Do you own your own business? Can you start one? If so, you have some additional options: You can form and contribute to a SEP IRA, or simplified employee pension plan. This plan allows you to contribute up to 25 percent of your income from the business into a SEP IRA, or up to $49,000 per year, tax deductible. No taxes are due until you take the money out. Some businesses may be better off forming a SIMPLE IRA or Solo 401(k), depending on the specifics. Consult a qualified financial advisor with experience in retirement planning to find out which alternative is most appropriate for you and which will enable you to maximize your contributions.

  

Want more ideas? If you are self-employed and have your own business, you have few or no employees and a steady stream of cash flow, you can make nearly unlimited tax deductible contributions to an insured pension fund, under Section 412(i) of the Internal Revenue Code. (Make sure you have an experienced advisor working with you on these. This might not be a job for your nephew who is just getting started in the life insurance business).

Have you spoken to your investment advisor about the growth in your account? How much risk can you honestly accept? The saying is the higher the risk the higher the yield. Is that risk and the stress worth the yield? A good advisor will set you up with some options that can mitigate or modify your risk. 

  

Are you renting? It might be time to buy. That may sound expensive now, but interest rates are extremely low as of this writing. Even if rates rise to five percent or more, it would still be historically low. If you're in your 40s, you will have that 30-year mortgage paid off in your 70s. At that time, you may want to convert the equity in your home to a stream of income via a reverse mortgage. It's not for everyone, but if you rent rather than buy, you won't have that option. You can make that decision when you get there.

  

Above all, save money. Squirrel money away every way you can. Cash is still king, and there's no substitute for healthy cash reserves in your credit union account, whether in checking, certificates or other conservative savings options. You might not get a great return, but it's safe, secure and steady. Most of your success is going to come from controlling spending decisions, rather than from making brilliant investment decisions. Set things up so you don't have to be brilliant to succeed, just prudent.

  

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Meriwest’s Spring Pre-Owned Car Sale is this Weekend!
Sat-Sun: April 12th and 13th
Chesbro Financial Center, San Jose, CA

Sale Hours:

• Saturday, April 12th:
  9:00 a.m. - 6:00 p.m.
• Sunday, April 13th:
  10:00 a.m. - 5:00 p.m.

Event Location:

Chesbro Financial Center
5615 Chesbro Avenue
San Jose, CA 95123

Take advantage of this special event!

• Low auto loan rates
• Huge selection of over 200 quality vehicles
• Up to 100% financing available for qualified buyers*
• Fast and friendly service
• Trade-ins welcome

Plus PRIZES and more!

5 Behaviors of Highly Effective Savers

Today's blog is a guest blog from the team at Debt.Org. Special thanks to the writer, Alanna Ritchie.

Managing personal finances successfully requires more than understanding numbers and having good accounting skills. In order for debt management solutions to be effective in helping you get out of debt and stay that way, they must be supported by changes in behavior.

Adopting five behaviors of highly effective savers can help to ensure that once you gain control over your debt and finances, you'll be able to keep that control in the long-term. Try incorporating these behaviors into the way you operate your personal finances, as well as your life in general, and you'll be sure to see positive results:

Set Incremental Goals

Setting a huge, generalized goal may end up overwhelming you, rather than moving you forward. Take that big goal – to get out of debt, perhaps – and break it into smaller, very specific steps with a workable, realistic time schedule. For example, when preparing for an upcoming big expense, set a weekly goal for saving for it.

Be a Good Record Keeper

Keeping track of what comes in and what goes out assists you in understanding the effects of your financial choices. When you are working to regain control of your finances, being a good record keeper will show you the positive results of your efforts, supplying even more motivation to keep up the good work.

3.       Own Your Situation and Your Choices

If creditors are pressing you or your credit card interest rates have skyrocketed, the bottom line is that such things are a natural consequence of your past behavior. Accept it, own it and deal with it, rather than being angry at the people calling or your credit card company. It will reduce the stress in your life and help you to be more focused on what has to be done. Maybe think of joining a credit union. They normally have fewer fees, lower interest rates on loans, more services and higher dividends on deposits than banks.

4.       Prioritize Properly

Place long-term well-being over instant gratification. Expand your vision beyond what you want in the moment to what you hope for and really need in the future by putting money in savings before you spend any for pleasure. Apply this concept to credit card use. Make financial choices—like putting money in savings or making a credit card purchase only if you know you will be able to handle payments—with the future in 

mind.

5.       Evaluate and Adjust as Needed

Effective savers are good at evaluating their own behaviors and situations and making the necessary improvements. They strive to be honest about their weaknesses and work hard to improve them. That is because they keep their goals and the big picture clearly in mind.

When you make these behaviors a part of how you manage your life and your finances, you'll be able to make the most out of the opportunity that debt settlement or other debt-related solutions offer you. All the work you do to eliminate debt will be wasted if you don't supplement the effort by developing behaviors that will keep you from returning to that position again.

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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Our next Free Financial Education Workshop is this Wednesday. Credit Myths and Repair will explain the top ten myths of managing credit. We will address balances, payments, collections, and judgments.  The workshop is fun and informative. You will learn more about credit than you had ever imagined!

Credit Myths and Repair

6:30 PM - Wednesday, August 28th. 

5615 Chesbro Ave, San Jose CA 95123

To RSVP, please contact gmeyer@meriwest.com or call 408-365-6328

Setting Financial Goals...And Reaching Them!

Are your financial goals set in concrete or can they be blown away as easily as a dandelion? 

Achieving your dreams and creating the financial future you want always begins with one important first step: a goal. Whether you're looking to help your child set goals so she achieves academically or have your own financial or self-improvement goals for the New Year, there IS a science to setting and meeting them.

A 2010 study in Applied Psychology followed college students who went through a multi-step goal setting program. Those who followed it completely showed significant improvement in their grades compared to those who did not.

While New Year's resolutions are notoriously short-lived, a clear process will put any objective you've set for yourself within reach. No matter what you have in mind, you can apply these steps to whatever goals are important to you, and the whole process should take less than 90 minutes.

1. Take a few minutes to write about the financial future you'd like to achieve. It's okay to start with a vague idea, but include as many specific details as possible.

2. Looking at the financial future you've envisioned for yourself, pick six specific and attainable financial goals that could help you achieve that future.

3. Number your goals according to their order of importance.

4. Look at each goal and write a paragraph about how achieving that specific step will benefit you.

5. For each financial goal, break it into smaller more manageable steps.

6. Identify obstacles that may get in the way and come up for a strategy for overcoming them should you need to do so.

7. Write about your commitment to reaching these ultimate financial goals.

That's it. Sound easy? Perhaps. But by taking the step of committing your goals to paper and working through these steps, you've laid the groundwork for success.

A goal is simply a dream with a deadline....may all your dreams come true!

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Reality Based Budgets for Teens and College Students – Jan. 16^th

Our next Financial Education Workshop will be Reality Based Budgets for Teens and College Students. It is a post college simulation of renting an apartment, buying a car, and developing a spending and savings plan. It is a fun and interactive session for the whole family and really opens the door to discussions about managing money. If this is something you or a member of your family needs, please feel free to join us. These workshops are open to the public.

Reality Based Budgets

6:30pm January 16^th at our Chesbro Main Office Location

5615 Chesbro Ave, San Jose CA 95123

Please RSVP with Gmeyer@meriwest.com.