50-Year Old’s Guide To Planning Your Retirement Income Strategy

Time to consider your retirement income strategy

As you enter your 50s, it’s time to look at your assets and start planning your retirement income strategy.

You still have time to accumulate wealth, but now is a good time to review your portfolio.

Begin building realistic expectations for retirement, such as how much you should withdraw from your account each year to provide adequate funds to cover you throughout your retirement years.

4% rule is a starting idea.

The 4% rule helps determine what you can really withdraw from your account safely so not to run out of money during retirement. This is a balancing act between the income lifestyle you desire and the fund stability you need.

At RCB Bank, we use a software tool to calculate projections and help clients with their retirement income strategies. By inserting a starting retirement age and predicted life span, we can see projections on safe withdrawal amounts that won’t drain the account too early in your retirement.

As you withdraw money, you want your remaining balance to continue to compound interest at a level that sustains your wealth throughout your lifetime.

The 4% idea is that you can build a balanced asset allocation appropriate all the way through retirement that will achieve more than a 4% return. Thus as assets grow, the income can also grow to keep up with inflation.

Nothing in life is a guarantee.

The 4% idea is a projection, not a guarantee for your retirement income strategy. There are a multitude of factors that may impact your account balance principal, which directly impacts the compound interest you depend on for sustainability.

You cannot do retirement income planning one time.

It is an ongoing, possibly annual, process of updating and adjusting to ensure you are covered throughout your retirement years.

Right now save, save, save!

You still have time to save for retirement. Take advantage of special catch-up IRA contributions for ages 50 and up.

2019 401(k) contribution limit – $25,000 for 50+;
$19,000 for 49-.

2019 Traditional and Roth contribution limit – $7,000 for 50+;
$6,000 for 49-.

Talk to a financial advisor.

A wealth advisor can look at your current financial situation and walk you through different retirement options based on your goals, investments, risk tolerance and time horizon. Don’t wait much later to start planning your retirement income strategy, and know that you still have time to accumulate wealth with disciplined savings.

RCB Bank Trust offers free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Invest in your future self. RCBbank.com/GetFit

 

This article is published in Value News, June 2019 Issue, valuenews.com.
Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value. Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only.
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Could The Market’s Worries Be Wrong?

March 2019 Trust and Investments Market Review

Inflation and geopolitics could be viewed as the market’s biggest risks. Current worries about inflation harken back to the so-called “wage-push” inflation of the 1970s, while geopolitical risks are ever present in the markets. Brexit seems a manageable near-term concern, but the risk from a growing rivalry between the U.S. and China, both industrially and diplomatically, loom larger these days. Could the markets be wrong to worry about inflation and China? This Market Brief argues these fears might be overstated.

WAGE-PUSH INFLATION

The worry the market has over the current historically low level of unemployment is driven by a fear the pool of job candidates has become so small that the primary way to acquire the next new employee is to hire one from another firm – and the main inducement is to offer a higher wage. This competition for workers eventually becomes so fierce that businesses are forced to raise prices to cover higher wages of new hires. Hence the name “wage-push” inflation can be understood as rising wages push inflation higher.

To assess whether or not the dynamics of the current labor market are conducive for wage-push inflation, other labor metrics are more illustrative than the unemployment rate. Rather than focus on the number of unemployed, this analysis instead focuses on the number of people employed. The Employment and Wage Inflation chart at the top left of page three depicts the Labor Force Participation Rate (LFPR) and the Employment to Population Ratio (EPR) beginning in 1948 through the present and compares them to the annual percentage change of Unit Labor Costs (ULC).

The LFPR measures the proportion of people who are working out of all those who are employed or seeking employment. If you are unemployed and not looking for work, you are not counted in the LFPR. The EPR is the number of employed adults in proportion to the entire adult population, whether or not they are seeking employment.

It can be seen on the Employment and Wage Inflation chart on page three that LFPR and EPR were fairly stable until the mid-1970s, and ULC rose and fell in line with EPR. The impact of women and younger baby boomers entering the workforce can be seen in both the LFPR and EPR rising during the 1970s and 1980s. This rising supply of workers may have offset growing labor demand and staved off wage inflation. Since the early 1980s, ULC has been more stable outside of recessions.

Also displayed on the chart is the impact of the recessions following the early 2000s “tech wreck” and 2008s sub-prime mortgage crisis. As the EPR fell during recent recessions, ULC also fell, but failed to accelerate as rapidly post-recession as it did in the past. A potential reason wages did not climb rapidly could be the greater supply of workers (LFPR) is higher today compared to the 1950s, 1960s, and most of the 1970s.

Read full March Market Review.

RCB Bank Trust offers free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value. Market Review is published by MainStreet Advisors of Chicago, an investment sub-advisor partner.
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40-Year Old’s Guide to Catching Up Retirement Savings

Chairs on a beach.

Many Americans do not have adequate savings to cover them through their retirement years.

Federal Reserve 2017 Report on the Economic Well-Being of U.S. Households

You’ve heard the advice to start saving for retirement in your 20s to reap the most benefits. That’s all well and good if you’re 20. What about if you’re 40? Can you catch up?

With 20 years ahead of you before retirement, yes, time is still on your side to build up your savings.
It’s crucial to plan a retirement income savings strategy that will provide adequate funds to cover you throughout your retirement years. You need to consider:

  • Age you plan to retire
  • Retirement goals
  • Living expenses
  • Expected life span

Talk to a financial professional you trust. They can walk you through realistic expectations, taking your savings time horizon, risk tolerance and retirement goals into consideration.

Crank up the Savings

Good news is you’re likely making more money than before. It is time to put away as much as you can into your retirement savings accounts.

  • Increase 401(k) contributions to 10-15%.
  • Max out Roth IRA contributions.
  • Cut expenses where you can to save more.

Balance your debt.

Bad news is you are likely facing more debt than before with a mortgage, multiple car payments, student loans (for you or your kids) and possibly your parent’s care. The trick during your prime accumulation years is to save as much as you can while not taking on too much debt.

  • Always pay yourself first.
  • Pay down your debt second.
  • Sparingly splurge last (minimize debt).

Create a plan.

People live longer. You need a savings strategy that focuses on sustainable income – continued growth – so you do not outlive your money.

  • Select a diversified portfolio of stocks & bonds.
  • Focus on growth that will outpace inflation.
  • Plan realistic expectations for retirement.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Invest in your retirement. RCBbank.com/GetFit

 

This article is published in Value News, March  2019 Issue, valuenews.com.
Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value.
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Are We There Yet?

February 2019 Trust and Investments Market Review

Many parents can appreciate the all-too-familiar question “Are we there yet?” We can all picture the children packed in the back seat of the family minivan, anxious to arrive at their destination. Parents, despite their best efforts to placate children with promises of sweets and presents, often fail to stop the barrage of questions. Perhaps this vignette illustrates attitudes of modern day investors. “Are we there yet?” is similar to the way in which some investors question when the markets will return to “normal.” This phrase can describe the sentiment of investors looking for a reason to change their goal, measure their success, or just simply time the markets. This Market Brief doesn’t exactly answer the question, but instead seeks to reframe it more constructively.

EQUITY MARKETS

When the stock market declines 15% to 20% over a short period of time, worried investors may lament “When will things get back to normal?” just as the child asks “Are we there yet?” Very concerned investors might even sell stocks if they can’t stomach this risk. Historical average annualized U.S. equity market returns are between 10% to 12%. The typical range of returns around this average is about 15% on either side as measured by the variance of annual returns. With return expectations of between 10% to 12% in line with historical data, a typical investor might not worry when markets are down 10%, but become very worried when the decline approaches 20%.

Investors might acknowledge that losses of 15% to 20% are possible, but it’s different when they actually see it on monthly statements. To us, this thought exercise might help contextualize investors’ yearning for markets to get “back to normal.” The top left chart on page three shows the path of the S&P
500 since January 1, 2018. The pullback in late January and early February was so short lived that some investors may not have had time to react. In fact, their absence of worry was rewarded by new all-time highs achieved from August through October. However, as the drawdown from the October highs through year end approached 20%, investor reaction was meaningfully negative as measured by data
including net equity fund outflows. Though the rally off the December lows has cut the loss in half, investor sentiment may remain poor until stocks recover and then surpass the October all-time highs.

Read our latest Market Review.

RCB Bank Trust offers free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value. Market Review is published by MainStreet Advisors of Chicago, an investment sub-advisor partner.
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Crude Oil Prices: Down the Well

January 2019 Trust and Investments Market Review

Pipeline for crude oil leading to refinery

The attention of investors was squarely focused on the steep declines in U.S. stocks from late September through year end. Yet, one of the most unexpected stories of the fourth quarter was the nearly 40% plunge suffered by global crude oil prices in the final three months of 2018.

The collapse caught many market participants on their back feet in part due to the growing chorus of
commentators in the late summer calling for $100 per barrel oil. Those predictions were largely driven by expectations of steady global demand and sanctions on Iranian oil exports scheduled for early November. During one historic stretch ending in mid-November, U.S. West Texas Intermediate (WTI) crude oil prices declined for a record twelve consecutive days. Lower oil prices have historically been a positive for U.S. consumer spending given their transmission to lower gasoline prices. In the corporate sector, lower crude oil prices often result in reduced input costs for large domestic industries including airlines and chemical producers. On the other side of the ledger, lower oil prices present challenges for
companies engaged in the exploration for and production of oil as well as regional economies with significant exposure to energy sector industries.

To what can we reasonably attribute the nasty bear market in oil? Most commentators pointed to one or more of the following factors: concerns about weakening demand for oil caused by what many fear is a global economic slowdown, global oversupply driven by record U.S. oil production and the impact of temporary waivers on Iranian oil sanctions given to eight countries by the Trump administration. In our view, it seems like the latter two items best explain the lion’s share of the recent collapse in oil prices.

Read full January Market Review.

RCB Bank Trust offers free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value. Market Review is published by MainStreet Advisors of Chicago, an investment sub-advisor partner.

 

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Sustainable. Responsible. Investing.

Get$Fit: Invest in the future you want.

Hand holds sustainable world
By Grant J. Goering, AIF,® AVP, Portfolio Manager, RCB Bank

 

There is a growing trend in investing — sustainable, responsible and impact investing (SRI)— that blends personal values and principles with investment choices.

Aligning investments with values.

Sustainable investors consciously choose to invest in companies that contribute to advancements in environmental, social and corporate governance (ESG) practices, e.g., clean tech, labor and human rights, anti-corruption policies.

Sustainable investing has grown 33 percent in the U.S. since 2014. That equates to $8.72 trillion. SRI now accounts for more than one out of every five dollars under professional management, according to the latest SRI trends report, published by The Forum for Sustainable and Responsible Investment Foundation (US SIF).

Sustainable investing performs in line with traditional investing.

Research also reveals a positive correlation between SRI strategies and corporate financial performance. A 2017 study conducted by Nuveen TIAA Investments found that investing in SRI strategies did not lead to a decrease in performance or an increase in risk.

The MSCI KLD 400 Social Index, one of the first socially responsible investing indexes, has performed right in line with the S&P 500.

In fact, during the February 2018 market downturn, SRI funds actually outperformed the broad market, according to Morningstar investment research company.

Wondering what impact your investments are making?

Ask your financial advisor for a portfolio review to see if your current investments include SRI companies.

Learn more about SRI at ussif.org, or speak with a financial advisor.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Invest in your values. RCBbank.com/GetFit

Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value.
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Bucket Approach to Investing

Bucket with money in it

Investing is a tool for building wealth.

Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.”

The key to successful investing is setting clear-cut goals. Know what you want, the cost to get it and how long you have to save.

We all have different comfort levels when it comes to investing our money. We call this risk tolerance. The concept of risk tolerance refers not only to your level of comfort in taking a risk, but also your financial ability to endure the consequences of loss.

Therefore, when it comes to investing, there is no one- size-fits-all strategy.  When I talk about investing with my clients, I like to use a bucket visualization. Imagine investing as three buckets.

Everyone needs to begin with a foundation – bucket one. This is your readily available cash, including your savings, emergency fund and short-term investments.

Once you have bucket one filled, you are ready to toss money into buckets two and three, your mid-term and long-term goals. The amount you invest in each bucket varies by your time horizon and risk tolerance. Bucket two consists of low-risk investments while bucket three is long-term, higher growth risk investments.

As with any plan, it is important to monitor your portfolio to ensure you stay on track with your goals.

If you plan to work with a financial advisor, make sure they are working for you with your best interest in mind. It’s important that you have an open line of communication with your advisor.

I am here to help answer questions you may have about investing even if you are not an RCB Bank customer. Feel free to call me at 918.342.7100 or email mwood@bankrcb.net.

At RCB Bank Trust, we offer professional recommendations at no cost, no obligation.

We provide a conservative approach to growing and preserving wealth tailored to your individual financial needs. Call one of our wealth advisors today and request your free review.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments. Connect with a wealth advisor in your area.

The bucket concept was originally created by planning guru Harold Evensky. It is one of many approaches to investing.
Investment products are not a deposit. Not insured by the FDIC or any federal government agency. Not guaranteed by the Bank. Subject to risk and may go down in value.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
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How to React to Stock Market Swings

From the opinion of a long-term investor

Business men looking at stock

Recent news about dramatic declines in the Dow Jones have been front and center lately.  While the “Dow” is often first quoted on the news, it is not a particularly good representation of the U.S. stock market.  It is just an index of 30 companies. Also, it is price-weighted, which means the companies with the highest stock price carry the most weight. The five companies that currently carry the greatest weight in the Dow are Boeing, Goldman Sachs, 3M, United Health Group, and Home Depot. However, none of these companies crack the top ten when looking at the largest companies in the U.S. by market capitalization.

Alternatively, the S&P 500 is an index of about 500 companies, making it a much broader barometer of the U.S. stock market.  Moreover, it is market-weighted, so the largest companies by market capitalization carry the greatest weight.

Headline vs. Reality

Headline: On February 5, 2018, the Dow experienced the largest point drop in history.

Reality: On February 5, 2018, the S&P 500 declined 4.10 percent, which ranks as only the 39th worst in the last 40 years.

Why has the stock market declined?

Believe it or not, the recent declines were prompted by good news.

January payroll reports show 200,000 workers were added to U.S. payrolls and, more importantly, average hourly wages increased 2.9 percent from January 2017. This was the highest level of year-over-year wage growth since June 2009. In anticipation of a strong jobs report and a pick-up in wage inflation, bond markets drove yields on the benchmark 10-Year U.S. Treasury bond sharply higher from a closing level of 2.63 percent on Thursday, January 25 to an intraday high of 2.88 percent on Monday, February 6. This sudden rise in market interest rates spooked equity investors in several ways. It could indicate both a faster pace of Fed rate hikes to keep up with inflation and an increase in borrowing costs for U.S. corporations.

What should I do about it?

I don’t get emotional about stock market swings.  Stock market swings are sometimes irrational.  Look to the fundamentals instead.  In my view, nothing has really changed in the last week from a fundamental or economic perspective. We believe the cyclical backdrop for stocks remains positive given synchronized global growth, rising corporate profits and relatively easy monetary conditions compared to history in the U.S. and abroad.

At RCB Bank Trust, we are conservative, long-term investors. 

We don’t try to time the market and we don’t overreact to headlines and short-term volatility. That being said, this is a great time to gut-check your risk tolerance and make sure your asset allocation is right.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments. Connect with a wealth advisor in your area.

Investment products are not a deposit. Not insured by the FDIC or any federal government agency. Not guaranteed by the Bank. Subject to risk and may go down in value.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
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Without Risk There is No Reward

knob showing risk and return

When it comes to investing, a person’s risk tolerance is an important factor in determining how their portfolio should be allocated.

I use a questionnaire to help me understand a person’s tolerance for risk. I use this information, along with other criteria, to recommend investments and the overall makeup of a portfolio.

What is risk tolerance?

Risk tolerance is an investment term that refers to your ability to endure market volatility. All investments come with some level of risk, and if you’re planning to invest your money, it’s important to be aware of how much volatility you can endure.

When gauging your tolerance for risk, consider the following factors:

Personality: Are you able to sleep at night knowing that you’ve put a portion of your hard-earned dollars at risk in a particular investment? Remember, it might be easy to tolerate a high-risk investment while it is generating double-digit returns, but consider whether you’ll feel the same way if the market takes a downward turn with your investment leading the way. It’s best to invest at a level of volatility that you are comfortable with.

Time horizon: The sooner you may need to use your investment dollars, the lower your risk tolerance. For example, for money you plan to use to make a down payment on a house in 2 years, your risk tolerance is lower than if you’re investing for retirement in 20 years. If you can keep your money invested for a long period of time, you may be able to ride out any downturns in the market (though time alone is no guarantee of higher returns).

Capacity for risk: How much can you afford to lose? Your capacity for risk depends on your financial position (i.e., your assets, income and expenses). In general, the more resources or assets you have to fall back on, the higher your risk tolerance.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments. Connect with a wealth advisor in your area.

Investment products are not a deposit. Not insured by the FDIC or any federal government agency. Not guaranteed by the Bank. Subject to risk and may go down in value.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
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Are you Financially Prepared to Live Longer?

man giving woman piggyback ride
By Nate Haberman, AAMS®, Financial Advisor

 

By the year 2040, it is projected that 14.6 million Americans will be 85 years old or older. This is triple in population from 6.5 million in 2014, according to the Administration of Aging¹.

Are you prepared financially to live longer? If you’re age 20 or older, retirement planning should be one of your top priorities. Not sure where to begin? I asked Nate Haberman, AAMS® Financial Advisor at RCB Wealth Management to share a few tips.

Figure out your retirement income needs.

Use your current expenses as a starting point. Don’t forget to factor in items like travel, new vehicles and healthcare expenses.

“A financial plan does not have to be complicated,” Haberman said. “Its purpose is to help you get from where you are to where you want to go, as well as improve the odds that you won’t outlive your money in retirement.”

Invest in your employer-sponsored retirement plan or an individual retirement account.2

Start now.

“It can be hard to plan for retirement when you are living paycheck to paycheck,” said Haberman. “But, a small amount is better than no amount. Setting aside a little bit each month will add up in the long run, especially if your employer matches a percentage of your contributions.”

Build an emergency fund.

Prepare for the unexpected and avoid tapping into your retirement savings.

“At one time or another, an expense will come up that you didn’t plan for – car repair or hospital visit,” said Haberman. “An emergency fund is there to help manage the financial risks of unforeseen expenses and potentially lessen some stress. Plus, early withdrawals from retirement accounts often have tax penalties assessed to them.”

Revise your plan along the way.

Life happens. Plan, prepare, review and adjust regularly in order to stay on track of your goals.

“A professional advisor can assist you through realistic expectations in your planning, while taking into consideration items like the age you plan to retire, inflation and taxes,” said Haberman. “A professional can walk you through all the available tools so you can better understand your options.”

While having a plan doesn’t guarantee a successful retirement, it may help you alleviate possible hardships, and allow you to live the life you want during your golden years.

Source:
1U.S. Department of Health and Human Services Administration for Community Living. Administration of Aging Profile of Older Americans: 2015. Retrieved from http://www.aoa.acl.gov/aging_statistics/Profile/2015/2.aspx
2Investing involves risk, including the possible loss of principal and there can be no assurance that any investment strategy will be successful. Before investing, carefully consider the risks, charges and expenses of the investment.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
Securities offered through Raymond James Financial Services, Inc. member FINRA/SIPC, and are Not insured by FDIC or any government agency, Not bank guaranteed, Not deposits, Subject to risk and may lose value.  Raymond James is not affiliated with the financial institution or any financial institution subsidiary.
Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability. Raymond James Privacy Notice.
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