How To Save For Multiple Financial Goals

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I hope you had a wonderful weekend! Happy May Day!

LRPC’s Monday Morning Minute for this week, “How To Save For Multiple Financial Goals” (presented below) comes to you courtesy of Charles Schwab & Co. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share enlightening, useful information with you each week.

I can hear you thinking, “Bob, I have trouble saving for one financial goal, how can anyone save for multiple goals?” Well, we all have multiple financial goals that we should be saving for. For example, our retirements, college for our kids, a first home, our next car or vacation. Check out below how Schwab thinks we can meet this challenge.

Have a wonderful week!

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How To Save For Multiple Financial Goals

From Charles Schwab & Co.

A comfortable retirement. A new car. A down payment on a house. Paying for a child’s college education. Coming up with a list of future financial goals is generally pretty easy. The bigger challenge is figuring out how you’re going to save for them all.

For most of us, socking a few extra dollars away in a savings account each month may be a good start, but it’s probably not enough, especially if we’re talking about multiple goals. The trick is to think strategically about your goals and come up with a saving and investment plan for each one. A little effort today can help make a big difference down the road.

Here are a few steps you can take as you work toward achieving your goals.

Set your goals

The first step is pretty easy: Write down your goals.

We suggest keeping the list short. If you have 15 different goals, you might struggle to keep track of them all. So think of this list in terms of what’s most important to you and your family — and prioritize. One way to do this is to group savings goals by needs, wants, and wishes, in order of priority.

Saving for retirement will likely be high on the list, and we would also suggest setting up an emergency fund with enough money to cover at least three-to-six months of essential living expenses. Then you could add things like buying a home, paying for college, a dream vacation, a new car or a festive wedding.

Sorting and allocating

Once you’ve made a list, it’s time to sort them by time horizon. Here, you can take advantage of a technique known as “bucketing” that many people use to calculate their retirement income. In short, this involves dividing your money into a series of buckets that hold what you will need in a few months, in a few years or in 10 years or more.

Knowing when you’ll need the money can help you decide what sort of investments you should consider as part of your savings plan. In general, it makes sense to use less-volatile investments for short-term goals, as you’ll have less time to recover from a dip in the market, and more aggressive investments for longer-term goals, as potential returns, can have more room to grow over time. Here’s how it generally works:

Bucket 1

Bucket 1 is where you save for short-term goals say in the next two years. This could include things like a wedding or nice vacation. Consider traditionally more stable investments such as cash, money-market funds or short-term Treasury bonds or certificates of deposit. Putting the money you plan to spend soon into liquid, readily marketable, generally, low-risk investments can help you avoid having to sell other investments, such as stock, in a down market to raise cash.

Bucket 2

Bucket 2 typically holds money that you expect to need over the next three to 10 years. This could include goals like a down payment on a home. Intermediate-term assets such as a mix of intermediate-term bonds or bond funds and stocks, with a focus on growth and capital preservation, make sense for this bucket.

Bucket 3

Bucket 3 typically holds money that you expect to need in 10 years or later, say for retirement or your kids’ college. This bucket should be invested for growth and income, with a larger allocation to stocks.

Note: These buckets aren’t one-size-fits-all. Each should be tailored to your risk tolerance for each goal as well as your time horizon. And be sure to diversify. You probably don’t want the fate of your goals to hang on the performance of a single asset.

Start investing

Once you’ve identified your buckets, it’s time to start putting money in them. Even modest contributions, when made regularly, can pay off substantially over time. You could even consider using a strategy such as dollar-cost averaging, which is when you buy a fixed dollar amount of a particular investment on a regular schedule, regardless of how the price fluctuates. That generally means buying more shares when prices are low and fewer shares when prices rise.

And stick to your priorities. Fund the items at the top of your list first, such as your retirement savings, regardless of what bucket they are in.

Note: You will have to do some budgeting to figure out how much you should save for each goal.

Stay the course

Check on your investments at least quarterly (or more often if you have a more aggressive portfolio). In general, you should consider making your allocations more conservative as you approach your goals by shifting away from riskier investments, such as stocks, in favor of more stable ones, such as bonds. Major life events, such as job changes, the birth of a child or a marriage, may also call for some adjustments.

Regular check-ins also make it easier to make adjustments. For example, if the price of a college education rises faster than you planned for, you might respond by cutting back your spending, increasing your regular contributions or (if your time horizon is long enough) shifting money into more aggressive assets that may generate higher returns.

Remember that you may need to “rebalance” your portfolio occasionally, which involves selling assets that have appreciated and buying more of those that haven’t done as well.  For example, if your stocks appreciate to the point where your stock allocation accounts for a larger share of your portfolio than your target allocation allows, and your bond allocation shrinks, you could consider selling some of the stock and buying more bonds to bring your portfolio back in line with your target.

By rebalancing on a regular basis, you can help ensure your portfolio doesn’t drift too far from your target mix of asset classes. Not rebalancing is akin to letting the market decide your asset allocation over time, which can significantly change your exposure to risk.

Finally, stick to your plan. Down markets can be unnerving. Successfully managing investments requires a long-term view and a commitment to staying on track.

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About LRPC’s Monday Morning Minute

Lawton Retirement Plan Consultants, LLC (LRPC) Monday Morning Minute is crafted to provide decision-makers with important information about the economy, investments and corporate retirement plans in a format that allows a reader to consume the information in less than 60 seconds. As an independent, objective investment adviser, LRPC has access to many sources of research and shares the best and most relevant information with its readers each week.

About Lawton Retirement Plan Consultants, LLC

Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Adviser (RIA) providing investment advisory, fiduciary compliance, employee education, provider management and plan design services to retirement plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or bob@lawtonrpc.com or visit the firm’s website at http://www.lawtonrpc.com. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.

The 7 Most Important Financial Planning Tips

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I hope you had a wonderful weekend! I am guessing that you, like me, have waited all year for Blah, Blah, Blah Day. Well, it’s here! Today is indeed Blah, Blah, Blah Day!

LRPC’s Monday Morning Minute for this week, “The 7 Most Important Financial Planning Tips” (presented below) comes to you courtesy of The Sense. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share enlightening, useful information with you each week.

We all should make sure we address some basic financial planning issues. The post below lays out some of the most important.

Have a wonderful week!

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The 7 Most Important Financial Planning Tips

By The Sense

Many of us have responsibilities for both growing children and aging parents. It’s no wonder that the majority of us haven’t saved much for retirement and lack some important financial basics such as an emergency fund or insurance.

It’s tough, but we need to start making our financial lives, and particularly saving for retirement, a priority. Here’s a list of a few priorities. Like all big projects, we recommend breaking this punch list into parts and tackling one every few months or so. While retirement planning is a focus you’ll note that there are a few priorities you must tackle even before planning your retirement, especially if you have a family that depends on you. [Read more…]

How To Raise Your Financial IQ In 2017

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I hope you had a wonderful weekend! Welcome to the Donald Trump presidency. Hang on!

LRPC’s Monday Morning Minute for this week, “How To Raise Your Financial IQ In 2017” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share enlightening, useful information with you each week. This is a short piece I believe everyone can read in less than 60 seconds.

You can make better financial decisions if you know what information is important and use the right financial knowledge base. This piece from Schwab can help you focus on the essential financial knowledge you need to make better financial decisions.

Have a wonderful week!

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How To Raise Your Financial IQ In 2017

By Carrie Schwab-Pomerantz, Charles Schwab & Co., Inc.

Key points

  • Want to make smarter financial decisions in 2017? Start by focusing on the key elements that should comprise your financial knowledge base.
  • Help raise your personal financial IQ by zeroing in on just 10 important details of your own financial situation.
  • Instead of making resolutions you might not keep, set up a support system that can help sustain you throughout the year.

It’s that time again. And while you may have promised yourself to be smarter about your finances in 2017, we all know that New Year’s resolutions are notoriously ineffective. Despite our best intentions, the vast majority of us simply don’t follow through. So this year, instead of making an overwhelming list of things to do, I’m suggesting that you focus on a few concrete things you need to know. In other words, if you educate yourself about your finances, you’ll be laying the foundation for success by building the right financial knowledge base.

Improve your financial knowledge base by raising your financial IQ

The financial world is filled with numbers and details, many of which you don’t really need to think about. I believe you can improve your financial knowledge base in 2017 by just zeroing in on the following 10 things — all practical information that only require simple math: [Read more…]

Healthy And Wealthy: How Planning Can Boost Your Well-Being

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MMM Newsletter and Website Header 10.2.15I hope you had a great weekend! Temperature-wise, I think we have seen the last of the 90’s for this year — maybe the 80’s too?

LRPC’s Monday Morning Minute for this week, “Healthy And Wealthy: How Planning Can Boost Your Well-Being” (presented below) comes to you courtesy of Charles Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, make sure you take a look at each major heading below.

I think most of us would agree that when we take time to plan for something major, like retirement, we have greater peace of mind. Many studies have shown, however, that we spend more time each year planning our vacations than we do our retirements. Schwab has put together a nice piece below that will hopefully motivate you to spend at least an equal amount of time retirement planning as planning for your vacation this year.

Have a wonderful week!

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Healthy and Wealthy: How Planning Can Boost Your Well-Being

By Rob Williams, Charles Schwab & Co., Inc.

Key points

  • Researchers have identified interesting links between health and wealth that underscore the benefits of retirement planning.
  • Even if you’re not a born planner, you can still take certain steps to help reach your goals.
  • We discuss four strategies to help you start retirement planning now.

Health and wealth are often related. That may sound intuitive, but the interconnections between the two may surprise you. They can also help shed light on some of the key challenges of retirement planning.

We know that health woes can hurt your finances. For example, a prolonged illness can lead to high medical bills and keep you from working. Researchers have also shown that financial troubles can be bad for your physical health, causing everything from stress, depression and insomnia to headaches, high blood pressure and eating disorders.

There are other connections, as well. A growing body of research has revealed that efforts to preserve your physical and financial health can be hindered by similar behavioral obstacles. Fortunately, it’s also turning up some intriguing options for managing this behavior.

Here, we’ll take a closer look at some insights from the world of behavioral research and discuss how investors can incorporate them into their retirement planning. [Read more…]

Six Critical Rules For Successful Retirement Investing

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MMM Newsletter and Website Header 10.2.15I hope you had a great weekend! The kids are now done with school for the summer — look out!

LRPC’s Monday Morning Minute for this week, “Six Critical Rules For Successful Retirement Investing” (presented below) comes to you courtesy of Jean Folger. As an independent, objective Registered Investment Advisory (RIA) firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, make sure you review each of the six rules highlighted below.

Everyone should be aware of the rules of retirement investing (I think Rule #6 may be the most important). Take a look below at Jean Folger’s thoughts on how you should invest for your retirement. Ms. Folger is an award-winning author of investment planning books.

Have a wonderful week!

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Six Critical Rules For Successful Retirement Investing

By Jean Folger

Retirement planning is the process of identifying your long-term income, determining your intended lifestyle and defining how to reach those goals. When planning for retirement, you’ll need to consider a variety of factors, such as when you’ll retire, where you’ll live and what you’ll do.

Keep in mind with each additional year you hope to retire early, your investment needs greatly increase. Also consider the difference in cost of living between cities, or even among neighboring zip codes. Add on daily expenses, medical expenses, vacations and emergencies, and you begin to see how the costs of retirement add up.

Your retirement goals will rest largely on the income you can expect during your retirement, and will likely evolve as your ideals, risk tolerance and investment horizon change. While specific investing “rule of thumb” guidelines (like “You need 20 times your gross annual income to retire” or “Save and invest 10% of your pre-tax income) are helpful, it’s important to step back and look at the big picture. Consider these six essential rules for truly smart retirement investing. [Read more…]

New Year’s Financial Resolutions: Get Your Finances In Shape For 2016

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MMM Newsletter and Website Header 10.2.15I hope you had a great weekend. Welcome to 2016!

LRPC’s Monday Morning Minute for this week, “New Year’s Financial Resolutions: Get Your Finances In Shape For 2016” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, try and review the headings for each section.

A good way to start out the new year for many of us is to get better organized. Start with your finances by considering the tips suggested below.

Have a wonderful week!

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New Year’s Financial Resolutions: Get Your Finances In Shape For 2016

By Rande Spiegelman

Key points

  • The New Year is a great time to reevaluate where you stand financially.
  • Consider these five resolutions to reshape your finances in 2016, including tips on budgeting, estate planning and more.

It wouldn’t be the New Year without resolutions. But whether it’s trimming your waistline or firming your financial profile, the key isn’t making the list, it’s sticking with it. Here are five steps to get you started on the road to financial fitness. [Read more…]

Borrow Smart — How To Use Debt Wisely

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. Summer is here!

LRPC’s Monday Morning Minute for this week, “Borrow Smart — How To Use Debt Wisely (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, make sure you review the Key Points and major headings below.

All of us will need to go into debt at some point in our lives. Schwab does a nice job below of outlining how to use debt wisely.

Have a wonderful week!

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Borrow Smart – How To Use Debt Wisely

By Rande Spiegelman, Charles Schwab & Company

Key points

  • Various types of tax-deductible debt can help you borrow more intelligently.
  • We explore the three primary sources of low-rate, tax-deductible debt for individuals: mortgage and home-equity debt, investment debt and student debt.

Investors often overlook the liability side of their balance sheets as they focus on their portfolios and other assets. But your personal net worth has two sides: assets and liabilities. Your first step is figuring out what overall debt level is right for you. The industry rule of thumb is called the 28/36 rule. [Read more…]

Seven Financial Mistakes To Avoid With Loved Ones

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. Don’t forget that Mother’s Day is this Sunday!

LRPC’s Monday Morning Minute for this week, Seven Financial Mistakes To Avoid With Loved Ones (presented below) comes to you courtesy of ThinkAdvisor. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short article that I believe everyone can finish reading in less than 60 seconds.

The financial mistakes we make with our loved ones sometimes cause permanent damage to the relationships we value most. Read on below to learn how to keep money from coming between you and someone you care for.

Have a wonderful week!

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Seven Financial Mistakes To Avoid With Loved Ones

By Bernice Napach, Senior Writer, ThinkAdvisor

Americans are marrying later or not at all, and more are cohabiting. The median age for first marriages is now 27 for women and 29 for men, compared with 20 for women and 23 for men in 1960, according to Pew Research. And about a quarter of those who have never married are living with a partner. Given those stats and the growing rate of divorce among those 50 and older, it’s important for couples to organize their finances and avoid fighting about money.

In the new book “Loving in the Grown Zone,” Zara D. Green and Alfred A. Edmond, Jr., co-principals of A2Z Personal Growth Enterprises, list some major money-related mistakes all of us should try and avoid with friends, family or loved ones. Here are the seven mistakes we all should avoid: [Read more…]

Retirement Income Strategies — Three Key Building Blocks

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. Did you pick the correct NCAA basketball Final Four?

LRPC’s Monday Morning Minute for this week, “Retirement Income Strategies — Three Key Building Blocks” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, be sure you review the Key Points and major headings below.

We all hope to retire someday and whether you are close to or far from retirement, I think you will find the information shared below by Schwab helpful.

Have a wonderful week!

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Retirement Income Strategies — Three Key Building Blocks

By Rob Williams, Charles Schwab & Company 

Key points

  • Market volatility and low interest rates make it challenging to develop retirement income strategies.
  • We recommend using three primary building blocks of retirement income after Social Security: cash and short-term reserves, interest and dividends, and capital gains.
  • Consider tapping interest, dividends and predictable income first if that’s your preferred approach, then drawing from the cash or capital gains portion of your portfolio.

If you are approaching retirement, you may be wondering how to generate retirement income. It’s a ubiquitous, and critical, question in investment planning. Low-interest rates and market volatility don’t make it any easier to put together retirement income strategies.

There isn’t a single source of income that you should use to fund your retirement spending. Instead, consider building blocks of returns from different parts of your portfolio.

Three building blocks of portfolio income

[Read more…]

Saving For College — How Much Will It Cost?

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. Did your bracket survive the first few rounds of the NCAA basketball tournament?

LRPC’s Monday Morning Minute for this week, “Saving For College — How Much Will It Cost?” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short article that everyone should be able to read in less than 60 seconds.

Wondering how much you should save to send your child to public, private or an out-of-state school? Schwab has calculated what’s needed below.

Have a wonderful week!

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Saving For College — How Much Will It Cost?

By Rande Spiegelman, Vice President, Schwab Center for Financial Research

Key points

  • Saving early for college offers greater flexibility and reduces the need for student loans.
  • We’ll cover college costs and how best to achieve your savings goals.

Sending children to college can be very expensive, especially with tuition rising year after year. But college doesn’t have to be cost prohibitive. The sooner you start saving and investing for college, the more flexibility you’ll have and the fewer loan payments you or your child will likely owe. In fact, it’s possible to save all the money you need to pay for college and never have to worry about loans — if you start early and invest regularly.

College gets more expensive every year

[Read more…]