Get an Early Start on Retirement

Think you can’t afford to save in your 401(k) when you make $50,000 or less?  You can’t afford not to.

Whether or not you’ve just thrown your graduation cap in the air or you’ve been building a career for a few years now, you’ve probably had more pressing financial concerns than saving for retirement.  Like how you’ll make the rent and also eat.  Or whether you’ll ever get out from under the crush or your student loans.  No wonder that a recent Wells Fargo survey found that fewer than half of millennials ages 22 to 32 were socking away cash for retirement—and that nearly 90% of those who weren’t said lack of money was the reason.

Waiting until you’re more secure financially, though, will cost you plenty.  Contribute steadily to your company savings plan starting in your twenties, and you have a good shot at being a millionaire by the time you retire.  Hold off, and that seven-figure stash gets more elusive.  How can you swing it?  These tips will help.

Get Some Perspective

Eight in ten of the nonsavers in the Wells Fargo study said they needed to pay down debt first.  A worthy goal, but one you should pursue simultaneously with, not ahead of, saving for retirement.  For one thing, most employers kick in $0.50 for every dollar you put in, up to the first 6% of your salary.  That’s an automatic minimum of 50% return versus, say, a 6.8% return whey you pay down student loans at that interest rate.  Plus, as Wharton professor Olivia Mitchell notes, “The money you put into a 401(k) or IRA benefits from a lifetime of tax-free compounding.”  That is, you not only earn money on your investment, but your earnings earn money.  The sooner you start, the greater the magnifying effect.  The bite from your paycheck may also be more manageable than you think, since you contribute with pre-tax dollars.  The after-tax cost of saving $3,000 a year, or 6% of a $50,000 salary: just $43.00 per week.

Free Up Cash

To come up with that scratch, eat a brown-bag lunch a couple of times a week, and drink the office swill instead of caramel macchiatos.  Opting for income-based repayment of your federal student loans instead of your standard plan can also help—if you make $50,000 and owe $30,000 you’d reduce payments by $68 a month, says financial aid advisor Kal Chany of Campus Consultants.  Sure, that will extend the life of your loan, but it’s worth it if you put the cash in your 401(k) and get an employer match.

Take Baby Steps

Start contributing a modest amount—say, 3% of your salary—then bump up by a percentage point a year, until you’re up to the recommended savings rate of 10%.  Time the hikes to your annual raise, and you won’t even feel the pinch.  Or, if your employer offers this feature, elect automatic annual increases.  Research shows that workers who use this set-it-and-forget-it approach end up with substantially bigger balances.

Article by Zain Asher in the September, 2013 issue of Money Magazine.

Tom Newsad has been building relationships in the Middletown area for over 20 years.  Newsad Insurance Services offers life, health, disability and long term care insurance as well as fixed and fixed index annuity products.  Tom serves clients in Butler, Hamilton, Montgomery, Preble, Miami, and Warren counties and beyond.

Seven Wonders of Life Insurance

Seven Wonders of Life Insurance

Your clients can address their financial problems with these seven life insurance solutions.

Here are some disturbing facts from LIMRA about U.S. life insurance ownership and the attitudes of consumers toward our products.

7 Life Insurance Facts

1. LIMRA’s 2010 Life Insurance Ownership Study found that 30% of U.S. households (35 million) have no life insurance protection.
2. In 2009, insurance companies issued 9.4 million individual life insurance policies in the U.S.—about one million fewer policies than they did in 2004.
3. About seven in ten middle-market households agree that life insurance is the best way to protect against the premature death of a primary wage earner.
4. The two top reasons Americans have life insurance are to cover burial and final expenses and to help replace the income of primary wage earners.
5. One in four households plans to buy life insurance for themselves or another household member in the next 12 months, but many are unlikely to follow through with their plans.
6. Twenty-four percent of households with children who are under the age of 18 want to speak with a financial professional about their life insurance needs, but they may not proactively initiate contact with an insurance producer or with a life insurance company.
7. About one in four middle-market households (those with yearly incomes of $35,000 to $99,999) admit they don’t know how to obtain or reach their financial goals. But only 18 percent of them want to speak with a financial professional about life insurance.

These are the problems that we face.  Here are the seven solutions:

1. Life insurance buys time: it allows loved ones to focus on their grief by helping to pay for the funeral and other costs.
2. It provides a fresh start: it lets loved ones start with a clean slate by helping to pay off credit card bills, outstanding loans, and even the mortgage.
3. It generates income: it helps replace lost income for years to come so that surviving family members can continue to pay for life’s necessities.
4. It offers flexibility: it gives a surviving spouse the chance to take time off from work or switch to a job that offers a more flexible work schedule.
5. It creates opportunities: it can provide funding to start a business, or pay for schooling so that surviving family members can train for new careers.
6. It funds the future: it offers a way to fund longer-range goals like a college education for the kids or a secure retirement for a surviving spouse.
7. It leaves a legacy: it gives parents the change to leave future generations with the legacy of long-term financial security.

Taking the first step

Problems and solutions go hand in hand, but if we want to use these solutions to help our clients and prospects, we must first start with digital marketing.  This means taking your digit and using it to push the buttons on the telephone, because everything starts with a call to a prospect.

September is Life Insurance Awareness Month.  Use the resources from the LIFE Foundation to reach out to your clients and prospects to educate and motivate them in their life insurance buying decisions.  Go to LIFE’s website at www.lifehappens.org to learn what is available to you and your clients.

-article by Marvin Feldman, CLU, ChFC, RFC

-article taken from NAIFA’s  Advisor Today July/August 2011 publication

Tom Newsad and Elaine Dominy of Newsad Insurance Services offer life, health, disability, and long term care insurance and equity indexed annuities to the Trenton, Oxford, Middletown, Monroe, Liberty, West Chester, Miamisburg, and Centerville areas and beyond

What Is The Purpose Of Life Insurance?

Financial advisors as well as some insurance advisors tell clients that insurance should generally be used for 2 purposes:

• The first purpose is to cover all final expenses including debts and funeral and burial costs
• The second purpose is to ensure that your family will be able to continue to maintain their lifestyle once you are gone

These are 2 primary reasons to purchase life insurance and should be talked through with a financial advisor or life insurance agent if you have questions about or are considering purchasing life insurance.

Life insurance can be a simple low cost alternative to providing for the future of our loved ones if we do not accumulate enough wealth to do so during our lifetime. Purchasing a life insurance policy can be a key element in estate planning and a legacy for surviving beneficiaries such as spouses and children.

For additional information, contact Tom Newsad at tnewsad@cinci.rr.com or http://www.newsadinsurance.com. Tom is a Grange Life Pacesetter agent serving Trenton, Middletown, Oxford, Franklin, Liberty Township and surrounding areas in Ohio, Kentucky, and Indiana.