Reverse the Summer Slide and Catch-Upon Your Retirement Plans

Are you saving enough to do the things you want to do when you retire? Every summer our children fall prey to the summer slide, losing vital skills as they put down their books for three months of fun; in much the same way, your retirement fund may be falling prey to a mid-year slump as daily life, hobbies, emergencies or vacations divert money away from saving for the future.

At least a couple of times per year, sit down with your family and trusted financial advisors to make sure your retirement investments are on track. The middle of the year is a good time to check whether you are taking full advantage of all your retirement savings opportunities, while you still have the remainder of the year to rebalance your portfolio, adjust your contributions and explore other retirement income options. Make retirement savings a priority – pay yourself first and catch-up to those financial goals you set at the beginning of the year.

Review and Catch-Up on Retirement Savings This Year!

Reviewing your savings, investing, summer spending and current debts can give you the opportunity to spot irregularities and adjust your budget well in advance of the year’s end. If you already work with a retirement planner or tax professional, consider discussing this review process with them so they can run the numbers for a more specific analysis of your money.

If you have put off saving for retirement or saved less than you planned, it’s not too late. The following are examples of retirement accounts and common supplemental income streams you, your spouse (family) and financial advisor will want to review and take steps to get back on track:

Employer-Sponsored Retirement Plans

If you just started a new job this year and haven’t already joined your employer’s retirement plan, do it as soon as possible. Contact your employer to find out when you are eligible to participate, then join on the next entry date. And if you had a retirement account with your former employer, ask about the process for rolling over directly to the trustee of your new retirement plan.

For those who already have a retirement plan with their employer, it is time to check your contributions to date:

  • Make sure you are contributing enough to your workplace retirement plan to receive any possible matching funds offered by your employer.
  • If you are behind on your savings goal, then consider increasing the percentage automatically deducted from your paycheck.
  • If you are age 50 and over you can make additional “catch-up contributions”; you don’t need

to be “behind” in your goal to be eligible for the additional pre-tax deferrals.

Each taxpayer, that’s you, is eligible to make the maximum pre-tax salary contributions to their profit-sharing retirement plan. Reaching the limit may help you catch up on this year’s goal, save more and possibly lower your tax liability.

Individual Retirement Accounts

Hopefully you are also making tax-deferred contributions to an individual retirement account (IRA).

While you have all the way up until next tax day (April 15) to reach your maximum contribution limit, if you are behind your goal or have reached the contribution limit for your employer-sponsored account, you may want to put away some free cash into an IRA today.

You will want to consult a financial advisor before contributing to an IRA as there are many factors (age, adjusted gross income, filing status, etc.) which may limit your ability to contribute or receive favorable tax treatment.

Social Security Benefits Strategy

Based on your salary and employment history, you (and your spouse) are probably eligible for social. If you have not assessed your social security benefits then it’s time to sit down with your financial advisor(s) to factor it into your retirement income plans. And for those who got married or divorced this year, then you also need to sit down with a professional to see how it will affect your plans to draw from Social Security.

Those individuals who are in-between jobs or starting out careers as self-employed could find themselves “behind” on their retirement goals by missing out on Social Security credits — which goes to determining their future retirement income benefit. This may mean working longer or drawing on a spouse’s benefit. If you have experienced a change that may reduce your credits earned, speak with your advisor about maximizing your benefits and finding other income sources to make up the difference.

Supplemental Retirement Income

Save beyond your retirement accounts. If you are behind on your goals or you have reached the limit your tax-advantaged account and want to invest a windfall for the future, you may want to supplement your tax-advantaged savings with personal savings, a taxable investment account, life insurance or annuity.

A personal savings account or certificate of deposit (CD) will ensure that you don’t have to dip into your nest egg to meet unexpected expenses. Financial professionals recommend saving three to six months of income for emergency situations.

A permanent life insurance policy can provide a cash investment portion in addition to a death benefit. This money can be used for retirement, to fund a child’s college education, pay off your home or entrusted to your beneficiaries. Those with cash-value insurance should review their policies each year and update the terms or beneficiaries anytime you get married, divorced, have/adopt children, etc. to ensure you have the coverage or income you need.

A tax-deferred annuity might help you reach your retirement savings goals while guaranteeing a stream of income for the future. Use a bonus or tax-refund to purchase a fixed, variable or indexed annuity and accumulate tax-free investment growth (until it’s time to withdrawal).

A traditional (taxable) brokerage account can offer you a multitude of investment choices, easy access to your money and fewer limitations. There are high risks involved, however, with a diverse and balanced asset allocation (mixture of stocks, bonds, indexed funds, various industries and markets, etc.), over a long period of time, these accounts are known to deliver high returns. And since you can continue to invest for a lifetime, you are far less likely to outlive your savings.

Comprehensive Retirement Plans Require Support and Expertise

The key to reaching your financial goals and having a successful retirement plan is having a positive network of friends, family and experienced financial advisors. These relationships will remind you of your goals, help you face challenges and celebrate your achievements along the way.

A good team of financial advisors – including tax professionals, legal counselors, insurance brokers and fund managers – can help you set and reach your financial goals. The people you trust with your

money should be those who makes you feel comfortable. After all, it’s not just your finances at stake; it’s your future.

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