By Jon L. Ten Haagen, CFP ®
Let’s start with a little reminder. You have until April 18 to get your 2016 qualified plan contributions in (IRA and ROTH IRA, etc.). Why miss the opportunity to put away $5,500 toward your future and let it grow through the coming years toward your retirement? If you are age 50 or older you can add $1,000 catch up for a total of $6,500. While you are at it, think about doing your 2017 contribution as well. This will give you 15 more months of tax-deferred growth in your retirement account. Why wait? If you do not have the full amount to contribute now, think about setting up an automatic investment plan. Talk to your Certified Financial Planner (CFP) about setting up a program that fits your wallet. Do yourself a favor and do it now!
Retirement planning and investing are long-term processes. Back in the days when I did a lot of ocean racing on sailboats, there was much planning to be done. Make sure the boat was properly equipped: Did we have the right sail inventory, were all the navigation aids up and working properly, did I have the right charts for the waters we were racing through, choosing the crew to make sure they were competent at the job I wanted them to do and how they got along with other people. Some races you had to be aboard a boat for three weeks or more. A boat like your vacation cabin or motor home feels smaller the longer you share it with other people.
This is much like retirement planning. There is a grand scheme to the process, however; we take it in small parts when starting and creating a plan. Again, this is a long term process with many moving parts. We look at investments which are going to most likely do the job we intend them to do. We plan the insurances you need to protect your family and properties, we put an emergency plan (fund) together to be sure you have access to stable value money when you need it – for the costs of repair or replacement for the house or cars, to have access when the markets are down and you do not want to touch the investments which are temporarily down in value.
Think of the retirement plan like I do in a long distance race (say across the Atlantic Ocean). Your plan is to sail from New York to London, England – You set the course (magnetic heading) and off you go. All goes well until a storm comes up and throws you off course, then you have to make mid-course corrections. This is exactly what we as financial planners do when our investments get thrown off course. We make adjustments. You cannot set and forget a financial plan the same as you cannot with a boating course.
There are other things coming along like living expenses going up, taxes rising, commodities like fuel oil and electricity and insurance plans increasing your costs. And let’s not forget inflation. It is always there! If you leave a dollar sitting on the table for a year without investing it and there is inflation of say 2 percent, then your dollar will only have buying power of 98 cents in a year. You must always keep your money working for you. If you do not have the time, knowledge or inclination to do this yourself, then perhaps it is time to talk with a professional who can give you the support and guidance you need. Call a Certified Financial Planner today and get on the right course for your financial success. The very best of fortune to you. Call “Ask the Expert” if you need help navigating the financial world.