Will You Ever Be Able to Retire Like Your Grandparents?

Will You Ever Be Able to Retire Like Your Grandparents?

  Katie Lobosco, writing for CNN about retirement, wonders if she’ll ever be able to retire like her grandmother did. She laments, “I won’t be getting a pension, let alone two, and I won’t be able to get my full Social Security benefits as early as Grandma did. There’s a chance I won’t receive as much. I’ll be relying on my own savings — big time.” This is the predicament in which many younger savers find themselves. It’s also something I talk with clients about every day. The retirement landscape is changing. People aren’t going into retirement expecting the normal “cliff” retirement. This is where you just stop working at 65 and never work again. Instead, many want a more gradual approach. This is sometimes due to personal choice, but other times it’s because the extra income is needed for a few more years. In any event, retirement planning can be a challenge, especially for young people. Lobosco goes on to explain that “Almost 70% of college grads now leave school with some student debt” and that “Just 14% of private sector workers receive pensions now, compared to more than 30% a few decades ago.” Adding to all of this, she rightly notes that life-expectancy has increased for younger generations of savers. But, according to her own calculations, there is some hope: Right now I set aside 13% of my income each year for retirement. But I plan on contributing more than that in the future. If I wanted to replace more of my income, I could start saving 21% now and retire at 67 with 85% of my pre-retirement...
How Millennials Can Overcome Their 6 Biggest Financial Challenges | The Art of Manliness

How Millennials Can Overcome Their 6 Biggest Financial Challenges | The Art of Manliness

Brett and Kate McKay over at The Art of Manliness offer some really helpful tips on how Millennials can overcome their financial struggles. What I appreciate is how they don’t shy away from looking the problem square in the face and making some really tough decisions. They touch on important issues, such as how to pay off student debt, how to save money on rent, and how to bring in some extra money. At our firm, we have these difficult conversations with clients on a regular basis. In our view, there is nothing better than someone who is proactive and who is willing to do whatever it takes become financially responsible. With hard work and a good support team, we believe that anyone can see genuine progress in their personal finances. We also appreciate their encouragement for clients to seek the help of a fee-only NAPFA-registered financial advisor. Read...
Couples Spending Huge Amounts to Get Married

Couples Spending Huge Amounts to Get Married

  Couples are spending the big bucks to get married. With an average cost now surpassing $35k, it will be important for couples to consider how the cost of a wedding fits in with other goals, such as retirement, a new home, or paying off student loans. It’s a good idea for couples who are considering getting married to consult with a fee-only financial planner, and perhaps even a tax accountant, before deciding how much to spend on the big day. Read more…  ...
Why Debt Is Not Always Bad: Understanding Your Debt to Equity Ratio

Why Debt Is Not Always Bad: Understanding Your Debt to Equity Ratio

An important part of analyzing the health of a business involves taking a look at its debt-to-equity ratio. A company’s debt-to-equity ratio tells analysts and prospective investors how much debt a company holds relative to its assets. This is expressed by the following formula: Debt-to-equity ratio = Total Liabilities  / Total Shareholders’ Equity (i.e. assets minus liabilities)   Analyzing a company’s debt-to-equity ratio is helpful because it tells investors how efficiently a company is running its business. In an article for Harvard Business Review, Amy Gallo explains that “if your debt-to-equity ratio is too high, it’s a signal that your company may be in financial distress and unable to pay your debtors. But if it’s too low, it’s a sign that your company is over-relying on equity to finance your business, which can be costly and inefficient.” Many of us have heard from our grandparents, especially those of us who have relatives who lived through the Great Depression, that we should avoid debt at all costs. In a debt-saturated country such as ours, this is not necessarily a bad thing for us to hear. While keeping debt low is usually a sign of financial health, there are cases when having too little debt, or not making efficient use of debt, can be detrimental to one’s financial success. Just as a company needs to make efficient use of debt in order to grow, an individual can, and often should, do the same thing. A similar formula can be expressed for individuals: Debt-to-equity ratio = Total Liabilities  / Total Assets I have clients, for example, who have accumulated significant estates and who are in a position to grow them. The germane...