5 Retirement-Planning Myths
Courtesy Of Kimberly Moore AXA Advisors, LLC (407) 926-2588 kimberly.moore@axa-advisors.com 5337 Millenia Lakes Blvd. Suite 405 Orlando, FL 32839
1. You Will Spend Less in Retirement.
Some people expect to reduce their spending once they say goodbye to their careers and enter retirement. But new travel experiences and reinvigorated interests in hobbies mean that many new retirees actually tend to spend more than when they were working. As the years go by, potential health issues often prove to be an increased financial expense that wasn’t anticipated.
2. You Don't Make Enough Money to Save
for Retirement.
While this is obviously true for some, many people simply live beyond their means. If you want to save money for retirement, make it a priority by paying yourself first through payroll deductions or other automatic payments.
3. You Need a Large Income to Become Wealthy.
Consistently spending less than you earn and investing the difference are what you have to do to become wealthy. Even someone with a modest income can become a millionaire by saving and investing diligently over time.
4. Social Security Will Take Care Of Your Retirement Needs.
Some baby boomers did not save much during their careers because they expected Social Security to carry them through retirement. However, Social Security was never intended to be a primary source of income. It was designed to be a supplement to a pension or other retirement savings. Since it is unlikely to support you over the whole of your retirement years, it is better to view Social Security as a safety net rather than the foundation of your retirement plan.
5. $1 Million Will Be Enough on Which to Retire.
It sounds like a lot, but a million dollars is simply not what it used to be. In light of longer life expectancies, potential health-care costs, and the lifestyle you want to maintain, $1 million may not go that far. It’s important to get the facts regarding ways to create your brightest future using what you have today. Ask for the facts, review the choices, and decide for yourself.
Tuesday, August 25, 2015
“Retirement”
Courtesy Of Kimberly Moore AXA Advisors, LLC (407) 926-2588 kimberly.moore@axa-advisors.com 5337 Millenia Lakes Blvd. Suite 405 Orlando, FL 32839
The POWER of Compound Interest
Are you aware of the power of compounding? Let’s start with the basics. Assume you could earn a constant 6% every year. If you invested $1, it would grow to $2 in 12 years. This doubling is called the Rule of 72. The rule says: “If you divide the known interest rate into 72, the quotient will be the number of years it takes money to double.” Try it.
The higher the interest rate, the fewer years it takes for money to double. The period of time it takes for money to double is called an interval. How many intervals do you have left until you reach retirement? If you are 40 years old and can earn 6% on your money, you have about two intervals until you reach 65. In this example, each interval is 12 years long. Imagine having $100,000 in an account earning 6% interest and you are now age 40. In 24 years, that account will be worth $400,000. If you wait until you are 72 to start taking the money, you will have $260,000 more – that’s $660,000!
Just for the sake of math, consider a 10% interest calculation. Then you would have 4.44 intervals and your $100,000 would double four times. That’s FOUR DOUBLES, plus a little. That same $100,000 would grow to nearly $2.4 million by age 72.
So ask yourself -- what is the power of compound interest? The real power is TIME – time to allow your contributions to grow within a savings strategy. Does it make any sense to procrastinate? Does it make sense not to contribute to your 401(k), IRA or ROTH IRA – as much as you can, as fast as you can? Get the facts today. Yes, it will take some self-discipline and personal sacrifice, but it’s worth it if you want the Rule of 72 to work for you.
Courtesy Of Kimberly Moore AXA Advisors, LLC (407) 926-2588 kimberly.moore@axa-advisors.com 5337 Millenia Lakes Blvd. Suite 405 Orlando, FL 32839
The POWER of Compound Interest
Are you aware of the power of compounding? Let’s start with the basics. Assume you could earn a constant 6% every year. If you invested $1, it would grow to $2 in 12 years. This doubling is called the Rule of 72. The rule says: “If you divide the known interest rate into 72, the quotient will be the number of years it takes money to double.” Try it.
The higher the interest rate, the fewer years it takes for money to double. The period of time it takes for money to double is called an interval. How many intervals do you have left until you reach retirement? If you are 40 years old and can earn 6% on your money, you have about two intervals until you reach 65. In this example, each interval is 12 years long. Imagine having $100,000 in an account earning 6% interest and you are now age 40. In 24 years, that account will be worth $400,000. If you wait until you are 72 to start taking the money, you will have $260,000 more – that’s $660,000!
Just for the sake of math, consider a 10% interest calculation. Then you would have 4.44 intervals and your $100,000 would double four times. That’s FOUR DOUBLES, plus a little. That same $100,000 would grow to nearly $2.4 million by age 72.
So ask yourself -- what is the power of compound interest? The real power is TIME – time to allow your contributions to grow within a savings strategy. Does it make any sense to procrastinate? Does it make sense not to contribute to your 401(k), IRA or ROTH IRA – as much as you can, as fast as you can? Get the facts today. Yes, it will take some self-discipline and personal sacrifice, but it’s worth it if you want the Rule of 72 to work for you.
Monday, August 24, 2015
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