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Dvorak LLC Friends:
Our CEO & our team’s lead Financial Planner, Chris vonLindenberg, has created 4 short video segments for this Spring’s company 401k virtual meeting. Also included is an article with Time Value of Money calculations for IRA’s, which we believe may help you with some benchmarking and understanding compound interest.
- Don’t leave free money on the table by failing to defer enough income to fully capture your company match.
- Consider benefits of making Roth elective deferrals over the long-term. ***note*** Roth deferrals do not jeopardize your pre-tax company match.
- To better prepare for the future and to stay on track with retirement preparedness, consider increasing contributions each year or every 6 months by just 1%.
- Avoid taking plan loans if at all possible; doing so can adversely impact account performance.
- If you have big money questions or savings just sitting in the bank not working for you and your future goals, seek qualified guidance from a CFP professional.
- If you haven’t looked into cutting interest costs with mortgage refinancing, it may be worth exploring due to today’s low interest rate environment.
- Target Date Retirement funds may be the prudent option for many participants.
Here in your corner if you need us.
Christopher W. vonLindenberg ChFC® CFS® RICP® CLU® AEP® CAP® CDFA®CERTIFIED FINANCIAL PLANNER™5301 Limestone Rd. Suite 226Wilmington, DE 19808Tel. 302.235.8672Fax: 302-235-8678Visit us online: www.lindenbergfinancial.com Securities and investment advisory services offered through Woodbury Financial Services, Inc. (WFS), member FINRA/SIPC. WFS is separately owned and other entities and/or marketing names, products or services referenced here are independent of WFS. This message and any attachments contain information which may be confidential and/or privileged, and is intended for use only by the intended recipient, any review; copying, distribution of use of this transmission is strictly prohibited. IF you have received this transmission in error, please (i) notify the sender immediately and (ii) destroy all copies of this message. If you do not wish to receive marketing emails from this sender, please reply to this email with the word REMOVE in the subject line.
On occasion we field the same general question, usually coming from our super-savers who are “under 45” as a client demographic.
“Am I on track for retirement?”
Because financial planning is personal and unique to each individual / family, the answer to answer this question is somewhat subjective and varies by household, particularly as we get older and accumulate greater levels of wealth. The rule of thumb is that young savers should aim to set aside 10-15% of household income (per year) to become adequately prepared for a normal retirement life; this also assumes a traditional working time horizon somewhere in to our mid 60’s, of course. As a side note, late savers may need to increase savings to 20% or more.
A goal of our practice is to help with benchmarking. In the spirit of IRA season (upcoming May 17 deadline), we’ve compiled a rather basic example of a hypothetical saver, aged 25, who began saving $500 per month through age 65 (41 years). It assumes NO increases in contributions and we illustrated hypothetical rates of return on the investment (ROI) of 6, 8 and 10%.
While some investors may start younger or later in life and experience better returns (or potentially worse), this chart might help someone benchmark their own progress against this example. Today, IRA contributions are capped at $6K per year ($500/mo.) for investors under age 50, so this example is very realistic, if not conservative - - especially for someone who is disciplined about saving the right percentage of their income at an early age. Additionally, if this were a Roth based account, the gains are not subjected to income taxes after age 59.5, so it could be 100% income tax-free!
About the author: Christopher “v” vonLindenberg is a Board Certified Financial Planner Professional™ and the CEO / Founder of Lindenberg Financial, Inc.; find us online: www.lindenbergfinancial.com