Lack of Direction Often caused by a failure to set clear priorities or because priorities conflict with those of a spouse.

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Hilda Simon
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2 Lack of Direction Often caused by a failure to set clear priorities or because priorities conflict with those of a spouse. Too Much Debt When payments on debt overwhelm your ability to save. Can come from low-interest long-term debt on a home or car, or from high-interest short-term credit card debt. No Emergency Cash Fund Unplanned expenses erode long-term savings and/or lead to excessive borrowing. 2

Can come from low-interest long-term debt on a home or car, or from high-interest short-term credit

3 10. Adapt to Change 9. Measure Progress 8. Invest in You 7. Manage Your Emotions 6. Maintain Excellent Credit 5. Buy the Right Insurance 4. Save for Retirement 3. Keep a Cash Reserve 2. Manage Debt 1. Have A Plan 3

4 Define your objectives Priorities what are you saving for? Retirement? College? House? Timeframe when do you need/want the money? Amount how much do you need? Figure out how How much can you save? Is it enough? If not, what changes can you make? Determine how you will measure your performance to goal Positive feedback helps offset pain of any sacrifice But keep it simple Helpful Tools T. Rowe Price Retirement Calculator 4

Is it enough? If not, what changes can you make?

5 Year 0 Year 2 Year 4 Year 6 Year 8 Year 10 Year 12 Year 14 Year 16 Year 18 Year 20 Credit cards have many benefits as long as you never carry a balance or pay late Your savings won t earn as much as the interest rate, so carrying a balance is guaranteed to make your poorer Late payments are expensive and can hurt your credit rating Always put at least 20% down on a home or car Ensures better interest rate Asset sales will generate cash Borrow only what you can afford to pay back after you ve met your target savings $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 Cumulative cost of carrying a $5,000 credit card 20% interest $0 5

credit rating Always put at least 20% down on a home or car Ensures better interest rate Asset sales will generate cash Borrow only what you can afford to pay

6 Benefits Sleep better worry less about unforeseen expenses Avoid painful alternatives Expensive credit card debt Borrowing against your retirement savings Asking family for money How much of a reserve do you need? Rule of thumb is 3-12 months of expenses Relatively more if: You are a single income family You are approaching retirement age Relatively less if: You re employment situation is unusually stable Helpful Tools Money-Zine.com Emergency Fund Calculator 6

Rule of thumb is 3-12 months of expenses Relatively more if: You are a single income family You are approaching retirement age

7 Social security will not be enough to live on $800,000 $700,000 Retirement Savings Even if you want to work forever, you may not be able to $600,000 $500,000 $400,000 IRS offers strong incentives to contribute to your 401k $300,000 $200,000 $100,000 Take advantage of the company contribution Take advantage of the investment resources available to you $0 40,000 35,000 30, Save 5% Save 10% Income in Retirement (today s dollars) Scenario assumes starting income of $50,000 per year with 3% employer contributions, 7% annual return on investments, and 3% inflation. 25,000 20,000 15,000 10,000 5,000 Investments Soc Security 0 Save 5% Save 10% 7

available to you $0 40,000 35,000 30,000 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Save 5% Save 10% Income in Retirement (today s dollars) Scenario assumes starting income

8 Insurance you probably need Home Auto Health Term Life Long-term Disability Insurance you may want Long-term Care Umbrella Liability Insurance you don t need Whole Life Variable Annuities Extended product warranties Best practices Choose the highest deductible you can afford, 1 especially on home insurance Self-insure when possible Empty nest retirees don t need life insurance one of many reasons to prefer term over whole life 1 Remember your emergency cash reserve! Helpful Tools SmartMoney Life Insurance Needs Calculator 8

especially on home insurance Self-insure when possible Empty nest retirees don t need life insurance one of many reasons to prefer term over

Benefits Qualify for more loans Secure the lowest interest rates available Improve your job prospects Essentials Pay your bills on time Keep a few credit cards with high available balances Use your

9 Benefits Qualify for more loans Secure the lowest interest rates available Improve your job prospects Essentials Pay your bills on time Keep a few credit cards with high available balances Use your cards but pay them off every month Check your credit reports annually for free (see below) Aggressively correct any errors in your reports Helpful Tools AnnualCreditReport.com https://www.annualcreditreport.com/cra/index.jsp Credit Karma Credit Score 9

Check your credit reports annually for free (see below) Aggressively correct any errors in your reports Helpful Tools

10 Avoid making financial decisions based on Fear Greed Envy Know your risk tolerance and invest accordingly (see tool below). Get on the same page as your spouse / partner Consider hiring a professional advisor (ahem!) Helpful Tools Risk Tolerance Quiz 10

Get on the same page as your spouse / partner Consider hiring a

11 Importance What you earn is as important as what you spend and save Today s workers are competing in a global marketplace Job security is a relic of the past Pensions, social security and other government assistance provide less security than ever Individuals with skills in demand will always find work Essentials Keep your skills current Volunteer for new or stretch assignments at work Seek relevant training if you sense your skills becoming outdated Seek feedback from your employer your performance level should never be a surprise Be intellectually curious learning is a lifelong process 11

work Essentials Keep your skills current Volunteer for new or stretch assignments at work Seek relevant training if you sense your skills becoming

12 Making progress towards a goal provides satisfaction similar to that you would get from what you are giving up You get what you measure Measure progress in a way that s sustainable rather than precise Helpful Tools Mint.com Personal Financial Management System 12

Measure progress in a way that s sustainable rather than precise

13 Expect the Unexpected Following the previous 9 steps will position you to weather adversity Altering your plan to changing conditions is called adaptation, not failure Remain Positive Economies and financial markets are inherently cyclical When times are unusually bad, they always get better When times are unusually good, make preparations for the downturn Ask for Help Resources are available to help with all aspects of your financial wellbeing, including from Addison Advisors Don t hesitate to learn about and take advantage of these resources 13

always get better When times are unusually good, make preparations for the downturn Ask for Help Resources are available to help with all

Planning for the Stages of Retirement

Planning for the Stages of Retirement The Financial Planning Association (FPA ) connects those who need, support and deliver financial planning. We believe that everyone is entitled to objective advice