Posts by Rosemont Advisors

Retirement Isn’t About Losing Identity

Posted by on Apr 13, 2016 in Articles, Uncategorized

It’s a chance to create a ‘second act.’ When my friend Lowry was 87 years old, she happened past a neighborhood travel agency in Glendale, California, a city where she’d lived for more than 20 years. She noticed a young man standing in front of the window, peering in. He looked to her like a man who was burning to go in and buy a ticket to a faraway place, but something was stopping him. The fleeting moment was so profound for her that she took it as a sign to make a change in her life. Lowry, a grandmother who taught business for nearly six decades, packed her world atlas and her old typing manuals, and began a chapter in travel adventure that included a Greyhound bus trip across the United States, and celebrating her 88th birthday in Bangkok. At the time, I was in my 20s, deeply involved in the world of work, not thinking at all about getting older, retiring, or what I might like to do in my second act. Lowry’s adventures registered most for me because she was a friend of my family, and was using my parents’ house as home base at the same time I was there, getting ready to fly the coop. Lowry lived to be 98. Now that I am 64 and in my first year of retirement after a career as an English teacher, I miss her. I wish Lowry were still around so I could talk to her about getting older, about adventure, about identity after work, and about how we approach this next phase of our lives. Many people consider retirement to be a blissful payoff for a lifetime of hard work. Without the confines of a job, you wake up happy each day to an empty calendar, infinite choices and no work stress, the thinking goes. I am not unappreciative of the free time before me. Yet as much as I enjoy making my own schedule each day, it occurs to me that there’s actually a formula for doing retirement right if you want a successful second act like Lowry. I believe it goes something like this: Retirees who seem to have no trouble going from working to not working did not identify themselves mostly by what they did for a living. Even if they did call themselves accountants or physicists, they no doubt also relied on other self-definitions. Next, either add to your circle of friends or re-educate those you have about your new endeavors. You have to spend time with people who identify you in this new way. It’s easier to let go of an old identity and craft a new one if you have relationships with people that match what you envision for yourself. For me, I always saw myself as more than a teacher, but it still feels odd to go from being one thing to not being that thing at all. I am replacing it with both travel and exploring my youthful dream of becoming a writer. To ease my transition, I enrolled in a writing grad program while I was still working to get myself ready for the shift. But I’m still struggling with seeing myself in an entirely new light. When I was talking to a fellow retiree recently, she asked why I couldn’t just call myself a writer. It’s a logical question, but one that makes me think of buying a trendy hat or pair of shoes you’ve been coveting and then feeling foolish when you wear them. Everyone else could think they look great, but you just...

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3 Smart Things to Do When You Inherit Money

Posted by on Mar 3, 2016 in Articles, Uncategorized

When you inherit money from a loved one, it might be tempting to treat yourself to a luxury. Maybe your dream car or a long vacation? While it’s not necessarily wrong to use at least part of your inheritance for a little fun, make sure you don’t make an impulse decision about how to use your newly acquired funds. American retirees expect to leave an average inheritance of almost $177,000 to their heirs, and in several countries, that figure is much higher. An inheritance can be extraordinarily useful for your financial health, but it’s not something you can necessarily expect or completely rely on. And once you do inherit some cash, it can be difficult to know how best to manage it. Above all, you’ll need to slow down and think about what’s best for you before you act. According to Consumer Reports, the very first thing you should do with your money is “park it.” People who blow through their inheritance in a short amount of time typically will either go on a spending spree or make bad investments, so this is one time when it can be better to save than invest, at least initially. Consumer Reports recommends putting the funds into an FDIC-insured money-market account to start. Putting the money in a checking account would make it too easy to spend. Another option is a 3-month CD with a penalty for early withdrawal, which will help prevent you from making any rash decisions. After you’ve successfully parked your cash, you’ll be able to take some time to think through your options. At this point, some consumers will feel most comfortable consulting with a financial planner, but be choosy when it comes to selecting an adviser. Fee-only financial planners are recommended because they don’t work on commission, so they won’t try to sell you on investments you don’t need. Whether you seek the help of a professional or manage your inheritance yourself, here are three smart ways to use your funds to secure your financial health. Save for emergencies If you don’t have an emergency fund, this should be your top priority. While not all experts agree on exactly how much should be saved, six to 12 months worth of wages will give you a great cushion to deal with unexpected expenses or a possible job loss. A sizeable rainy-day fund is also great for surprise opportunities, like a last-minute vacation with friends. It could be tempting to use your inheritance to pay off your debts immediately, but without an emergency fund, you could be back in debt in no time. Pay down debt Paying off all high-interest debt, such as credit card balances and auto loans, is an excellent use of inherited money. The sense of relief you’ll feel after eliminating these burdens will be tremendous. Many consumers are less sure about whether to pay off a mortgage. This is not as cut and dry. In some cases, it can be wiser to put money toward your retirement before paying off a mortgage due to the tax deductibility of your mortgage. The decision will likely depend on how close you are to retiring, as well as the rate on your mortgage versus the returns you could expect by putting the money elsewhere. Contribute to your retirement If you have not yet contributed the maximum amount, putting part of your inheritance into a retirement account will help you work toward securing your financial future. However, that’s not to say those who expect an inheritance in the future should neglect their retirement savings. About two-thirds of Americans say the inheritances they receive will...

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5 Steps to Plan Your Retirement

Posted by on Dec 1, 2015 in Articles, Uncategorized

Only one in three Americans in their 50s has ever tried to plan for retirement, according to a National Bureau of Economic Research study. And a third of those who try to plan admit that they either gave up or failed miserably. The result: Barely 20 percent of pre-retirees have a useful plan for retirement. But making a plan is not all that difficult. Remember, it’s not written in stone, so you don’t need to get bogged down in details, and you don’t have to worry about getting everything right. It’s like making an outline for an essay. The outline gives you a rough idea of where you’re going. But you don’t actually write the essay until you start living your way through retirement. Here are five items to include in your retirement outline. Manage your expectations. One rule of thumb says you’ll need 70 percent of your pre-retirement income to live comfortably in retirement. But that’s just a general rule. If you want to travel, join a golf club or help send your grandchildren to college, you might need more. But many people live on less, especially if they move to a less expensive area of the country and follow a simpler lifestyle. Account for your changing expenses. Housing expenses tend to go down as we age, as our mortgage gets paid off and maybe we downsize to a less expensive home. Most other expenses also decrease, including costs for food, clothes, recreation and insurance. But medical care is one expense that goes up. According to the Center for Retirement Research at Boston College, a retired married couple spends up to $260,000 over their lifetimes for out-of-pocket health expenses, including long-term care. And don’t forget to factor in inflation, which has recently been running near zero, but will more likely average 3 to 4 percent over the course of your retirement. Don’t shortchange your life expectancy. Surveys show that over half of pre-retirees underestimate how long they’re going to live. Women underestimate more than men. According to the Social Security Administration, the average 65-year-old male can expect to live to age 84, and the average female will make it to 87. But you really need to plan for more than that. One out of five 65-year-old males and one out of three females will live to age 90. Your savings may run out, but Social Security will not. That’s one reason to delay taking benefits as long as you can, up to age 70, so they accumulate for a larger payout later in life. But it’s not just the money. You may have more time than you think. So sitting around and relaxing may not be all you want to do in retirement. You likely have time to start a business, travel the world, develop a new skill and find a new hobby. Be ready for a reality readjustment. You may have a plan, but sometimes things don’t work out the way you expect. For example, there is a considerable gap between when people think they’re going to retire, and when they actually retire. The median expected retirement age is 65, according to a Gallup poll. But the actualretirement age is 61, because layoffs and health issues cut many careers short. The Gallup poll also found that 70 percent of American workers think they will continue to work in some capacity after they retire, but it turns out that many people can’t find a suitable job. Only about 25 percent of retirees work in retirement. So whether your plans involve working or something else, do a little advance homework...

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10 Savings Tips for Holiday Shopping

Posted by on Nov 10, 2015 in Articles, Uncategorized

Christmas is weeks away, but many consumers are already prepping for the annual holiday spending extravaganza — and they may be on to something. Retailers, to be sure, are revving up the profit engines and setting their sights on Black Friday, traditionally the single biggest shopping day of the year. In the not-too-distant future, Christmas décor will be hanging from store rafters and weekly circulars will be advertising deals on coveted items. These tips can help consumers get their budgets in order, their money saved up and their plans in place for a smooth and financially sound holiday shopping season. Make a budget. Hold a “state of the union” about holiday expenses with your spouse, significant other or anyone with whom you expect to buy gifts this year. It may not be fun, but knowing in advance how much you can spend will alleviate a lot of stress. Make your holiday budget all-inclusive: gifts and holiday cards for everyone on your list, wrapping paper and stamps, decorations, food and drinks for parties and during shopping excursions and whatever else requires a cash outlay during the holiday season. Don’t budget for more money than you have or know you can save by the deadline. Save now. Like, immediately. There is still a month to go and for anyone paid weekly, that’s five paychecks before Black Friday. Fix a budget now and stash some cash for the big day. Given the magnitude of many holiday discounts, $30 out of each paycheck stretches pretty far. To ensure the savings intended for Black Friday are actually used for that purpose, consider setting up a targeted bank account. Many employers let employees divvy up their take-home pay into multiple accounts. Save up gift cards. Any cash-like asset can be put toward a holiday shopping budget, so get in the habit of saving up gift cards. Dig out old ones that may still hold a few dollars and take them along when you shop; every little bit helps. Alternatively, search a site such as Gift Card Granny and buy a few unwanted gift cards from a marketplace that sells the plastic at a discount off its underlying value. Pay with cash. Once you’ve decided on a holiday budget, stick to it. Credit cards are the enemy here — they tempt you to spend now and worry later. Be firm and reject the siren call of credit when hitting the holiday sales. Pay for this year’s goodies with cash, check or debit card so you don’t spend more than you have. Steel yourself to walk away from holiday sales once you’ve hit your holiday budget limit. Purge to make room for new. Everyone has something to get rid of and there’s still time to try selling it. In some parts of the country it’s still warm enough to host a garage sale. You can also post sale items to Craigslist or with a local buy/sell/trade group on social media. You’ll make room for the flood of new gifts while padding the holiday budget with a spot of extra cash. Make a list and check it twice. Holiday spending, especially on Black Friday, can easily turn into a cash-flow catastrophe. Seemingly everything is on sale everywhere, luring too many consumers to spend, spend, spend. To help stanch the outflow, make a list of recipients and the amount you’re willing to shell out — and then stick to it. Have a plan of action ready even before the Black Friday ads start rolling out. Clip and save. No need to go coupon crazy here, but if you spot...

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Quarterly Newsletter – 4th Quarter 2015

Posted by on Oct 28, 2015 in Quarterly Newsletter

Keep plugging away with your retirement plans. The stock market plunge on August 24, 2015 – the 8th worst day in U.S. stock market trading history – gave investors plenty of cause for concern. But there’s no reason to abandon your long-term investment plans after a temporary setback. 4th Quarter 2015 Newsletter

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