Smart use of variables can lead to right answers for retirement

Scott-Johnson---HeadIf you think back to your math classes in high school or college, you may remember that many of the problems involved the use of variables. Changing these variables around in any fashion would change the outcome of the problem. Similar situations occur in life all the time. To illustrate: If you look at the need to manage your retirement income so that you can’t outlive it as a “problem” to be solved, you will need to adjust some variables to arrive at the solution you seek. That’s why it’s so important you be aware of the key variables involved in your retirement income planning.
What are some of these variables? Consider the following:
• Your investment mix — You might think that once you reach retirement, you can invest solely in income-producing vehicles, but you can’t forget about inflation. Even a low rate of inflation, such as we’ve had for a number of years, can seriously erode your purchasing power over time — which is why you need to consider owning at least some investments that provide growth potential. Of course, you can change your investment mix at any time: For example, you might want to shift to a greater percentage of income-oriented investments as you move deeper into retirement.
• Your withdrawal rate — You’ll need to calculate how much you can afford to withdraw from your investment portfolio each year without depleting it prematurely. Your annual withdrawal rate will depend on a few different factors — such as your projected longevity, your investment mix and your other sources of income — but you’ll want to be careful not to take out too much too soon. As was the case with your investment mix, you have the flexibility to adjust your withdrawal rate during your retirement years.
• Your Social Security — You can start collecting Social Security benefits as early as age 62, but your benefits will be permanently reduced by up to 30% unless you wait until your Full Retirement Age (FRA), which is likely 66 or 67. However, your monthly checks can increase if you delay taking your benefits beyond your Full Retirement Age, up to age 70. If you come from a particularly long-living family, and you have sufficient income apart from Social Security, you might want to delay your payments to get the larger benefit amount. Once again, you have a choice to make.
• Your earned income — Just because you’ve retired from one career, it doesn’t mean you’ll never again earn some income. Many retirees take part-time jobs, do some consulting or even open a small business. Whether you feel that you need to work, or you just want to work, the money you earn from employment can be an important component of your overall retirement income.
As you can see, all these variables involve choices on your part. And how you choose to exercise each variable will affect all the other variables. Consequently, as you manage and monitor your retirement income, you’ll need to make many important decisions. Still, this doesn’t have to be a scary prospect — because the very fact that you have choices means you also have a great deal of control over your situation.
So, study your choices carefully, as you work toward achieving the income you need to enjoy the retirement you want.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

What can investors learn from the All-Stars?</p><p>

  Baseball’s best players were scheduled to gather in Minneapolis this week to participate in the All-Star Game. If you’re a fan or even a “weekend athlete,” you can admire these players for their abilities, even if you — like the vast majority of humanity — can’t hope to duplicate them. But if you’re an investor, you may be able to learn some practical lessons from the All Stars.

So let’s look at a few common All-Star traits to see how they might apply to investors:

CNB Bank & Trust promotes local talent

CNB Bank & Trust has announced that Joe Orrico has been promoted to Assistant Vice President and Kelly Wood has been promoted to Assistant Vice President. These promotions followed the board of directors’ annual employee review process.

Joe is a graduate of Stagg High School in Palos Hills. After schooling he attained several years’ of experience working in customer service and sales. Since transitioning into community banking in 2006 as a teller, he has worked his way up to his current position. Joe began employment with CNB of Oak Forest when they opened their facility in 2010 as a Lead Sales Rep. Joe now serves as Assistant Vice President/ Regional CSR Supervisor and resides in Joliet with his wife, Jessica, and their son Maelin with another son on the way.

Could this tablet replace laptops?

Techno Talk

Will Microsoft’s Surface Pro 3 replace your laptop? That’s the $1 million question. Microsoft officials say it absolutely can — and they’re right.

The Surface Pro 3 is Microsoft’s newest tablet. The device has a bigger screen than its predecessors (12 inches), is more powerful and comes with better accessories.

There are five models, ranging in storage (64 GB to 512 GB), power (Intel i3, i5 and i7 Processors) and price ($799 to $1,949).

If you really want to replace a laptop, you’re looking at any of the four best models (which start at $999).

At these levels, the insides of the Surface Pro 3 are essentially the same as what’s inside a MacBook Air. For all practical purposes, the Surface Pro 3 is simply a laptop with a detachable keyboard.

Start saving today for tomorrow’s college bills

Scott-Johnson---HeadAnother school year is drawing to a close. If you have young children, you might be planning for their summer activities.
But you also might want to look even farther into the future — to the day when your kids say “goodbye” to their local schools and “hello” to their college dormitories. When that day arrives, will you be financially prepared to pay for the high costs of higher education?
Consider this: For the 2013–2014 academic year, the average cost (tuition, fees, room and board) was $18,391 for an in-state student at a four-year public college or university, and $40,917 for a private school, according to the College Board. And these costs may well be considerably higher by the time your children enter college.
Of course, these are just the “sticker” prices; some families pay less, thanks to grants and tax benefits, such as the American Opportunity Tax Credit and the Lifetime Learning Tax Credit. Still, you may encounter some hefty college bills down the road.
But college is still a good investment in your child’s future. Over an adult’s working life, an individual with a bachelor’s degree can expect to earn, on average, nearly $1 million more than someone with only a high school diploma, according to the U.S. Census Bureau. So you’re saving for a good cause.
Unfortunately, you may not be saving enough — or you might not be making the most of your savings. To save for college, more parents use a general savings account than any other method, according to Sallie Mae’s How America Saves for College 2014 study. These types of accounts carry two significant drawbacks: They typically earn tiny returns and they offer no tax advantages.
However, you do you have some attractive college-funding vehicles available, one of which is a 529 plan. Your 529 plan earnings accumulate tax free, provided they are used for qualified higher education expenses. (529 plan distributions not used for qualified expenses may be subject to federal and state income tax and a 10% IRS penalty.) Furthermore, your 529 plan contributions may be deductible from your state taxes. But 529 plans vary, so be sure to check with your tax advisor regarding deductibility.
A 529 plan offers other benefits, too. For one thing, the lifetime contribution limits for 529 plans are quite generous; while these limits vary by state, some plans allow contributions well in excess of $200,000. And a 529 plan is flexible: If your child decides against college or vocational school, you can transfer the unused funds to another family member, tax and penalty free.
While a 529 plan is a popular choice for college savings, it is not the only option available. You also might want to consider a Coverdell Education Savings Account, which, like a 529 plan, can generate tax-free earnings if the money is used for higher education expenses. You can typically only put in a maximum of $2,000 per year to a Coverdell account, but it does offer more flexibility in investment choices than a 529 plan
Your children may be young today, but, before you know it, they’ll be packing their bags for college. So, no matter which college savings vehicles you choose, put them to work soon.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.