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What’s your vision of retirement?

  • Written by Scott Johnson

When you start out in your career, you’re probably not thinking much about retirement. At this point, your picture of a “retirement lifestyle” may be, at best, hazy, hidden as it is behind a veil of experiences you’ve yet to encounter. But as you move through the years, your view of retirement comes into clearer and closer focus — and this vision will have a big impact on your savings and investment strategies.

Consequently, to create and implement those strategies effectively, you’ll need to define your retirement vision by identifying its various parts. Here are some to consider:

  • Travel — If you’re like many people, you may dream of traveling during your retirement. But what does “travel” mean to you? Do you envision taking a cruise or an international trip every year? Or is your idea of travel just a short jaunt to a popular destination, such as a lake or the mountains or the beach? The difference in costs between global and U.S.-based travel can be enormous, so you’ll need to define your goals and estimate your expenses.
  • Second home — Once you retire, you’ll have to make some housing-related decisions. Should you sell your home and “downsize”? Or do you want to keep your current residence and possibly purchase a second home, such as a condominium, in another part of the country? Obviously, you’ll need to factor in these choices when you think about how to invest before you retire and how to manage your withdrawals from your 401(k), IRA and other accounts during your retirement.
  • Volunteer activities — You might think that your volunteer activities during retirement won’t affect your finances much. But if you are particularly ambitious, and your volunteerism involves travel, renting space, purchasing equipment and so on, you might be looking at some large cash outlays. Furthermore, if you host people at your house, you may be incurring some types of liability risk, which you might need to address through appropriate insurance coverage.
  • Hobbies — During your working years, you may pursue your hobbies always with the thought that you can devote a lot more time to them after you retire. However, expanded hobby activities may involve expanded costs. For example, if you’re good with cars, you might decide to invest in that foreign sports car of which you’ve dreamed. Or, if you’re fascinated by genealogy, perhaps you’ll start traveling to places once inhabited by your ancestors. These types of activities can be expensive, so you’ll have to evaluate your saving, spending and investing habits to determine how to accommodate your increased expenditures on your hobbies.
  • Second career — Many people look forward to retiring from one career so they can start another — opening a small business, consulting or even taking a part-time job. Clearly, if you were to start your own business, some expenses would be involved, so you’ll have to plan for them. Even if you become a consultant or work part time, you could incur various costs, including travel. And, in relation to these types of work, you may also have insurance and health care issues to address.

By identifying the various components of your retirement vision, and estimating their respective costs, you can make those saving, spending and investment choices that can help you work toward your retirement dream.

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.

Area businesses take on a new look in the snow

  • Written by Rebecca Lanning

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Photos by Jeff Vorva

Snow was piled up high in Evergreen Park at the corner of 95th Street and Pulaski Road. And that was before a second storm hit the next day.

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Vehicles at the Enterprise Car Sales in Worth accumulated a lot of snow during the recent storm.

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A small army of snow blowers were camped in front of J-Tel Lawn and Snow Equipment in Worth on Thursday.

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The AutoZone in Oak Lawn received a little ice and snow during the storm.

When opportunity knocks, open the door

  • Written by Scott Johnson

Scott-Johnson---Head  If you’ve been around long-time investors, you’ll probably hear them say, ruefully, “If only I had gotten in on the ground floor of such-and-such computer or social media company, I’d be rich today.”
  That may be true — but is it really relevant to anyone? Do you have to be an early investor of a spectacular company to achieve investment success?
  Not really. Those early investors of the “next big thing” couldn’t have fully anticipated the tremendous results enjoyed by those companies. But these investors all had one thing in common: They were ready, willing and able to look for good opportunities.
  And that’s what you need to do, too. Of course, you may never snag the next big thing, but that’s not the point. If you’re going to be a successful investor, you need to be diligent in your search for new opportunities. And these opportunities don’t need to be brand-new to the financial markets — they can just be new to you.
  For example, when you look at your investment portfolio, do you see the same types of investments? If you own mostly aggressive growth stocks, you have the possibility of gains — but, at the same time, you do risk taking losses, from which it may take years to recover. On the other hand, if you’re “overloaded” with certificates of deposit (CDs) and Treasury bills, you may enjoy protection of principal but at the cost of growth potential, because these investments rarely offer much in the way of returns. In fact, they may not even keep up with inflation, which means that if you own too many of them, you will face purchasing-power risk. To avoid these problems, look for opportunities to broaden your holdings beyond just one or two asset classes.
  Here’s another way to take advantage of opportunities: Don’t take a “time out” from investing. When markets are down, people’s fears drive them to sell investments whose prices have declined — thereby immediately turning “paper” losses into real ones — rather than holding on to quality investment vehicles and waiting for the market to recover. But successful investors are often rewarded when they not only hold on to investments during declines but also increase their holdings by purchasing investments whose prices have fallen — or adding new shares to existing investments — thereby following the first rule of investing: Buy low. When the market rises again, these investors should see the value of their new investments, or the shares of their existing ones, increase in value. (Keep in mind, though, that, when investing in stocks, there are no guarantees; some stocks do lose value and may never recover.)
  Instead of looking for that one great “hit” in the form of an early investment in a skyrocketing stock, you’re better off by seeking good opportunities in the form of new investments that can broaden your existing portfolio or by adding additional shares, at good prices, to your existing investments. These moves are less glitzy and glamorous than getting in on the ground floor of the next big thing — but, in the long run, they may make you look pretty smart indeed.

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.

Financial resolutions for the New Year

  • Written by Scott Johnson

Scott-Johnson---Head  About 45 percent of Americans usually make New Year’s resolutions, according to a survey from the University of Scranton.
  But the same survey shows that only 8 percent of us actually keep our resolutions. Perhaps this low success rate isn’t such a tragedy when our resolutions involve things like losing a little weight or learning a foreign language. But when we make financial resolutions — resolutions that, if achieved, could significantly help us in our pursuit of our important long-term goals — it’s clearly worthwhile to make every effort to follow through.
  So, what sorts of financial resolutions might you consider? Here are a few possibilities:
  • Boost your contributions to your retirement plans. Each year, try to put in a little more to your IRA and your 401(k) or other employer-sponsored retirement plans. These tax-advantaged accounts are good options for your retirement savings strategy.
  • Reduce your debts. It’s not always easy to reduce your debts, but make it a goal to finish 2014 with a smaller debt load than you had going into the new year. The lower your monthly debt payments, the more money you’ll have to invest for retirement, college for your children (or grandchildren) and other important objectives.
  • Build your emergency fund. Work on building an “emergency fund” containing six to 12 months’ worth of living expenses, with the money held in a liquid account that offers a high degree of preservation of principal. Without such a fund, you might be forced to dip into your long-term investments to pay for emergencies, such as a new furnace, a major car repair, and so on. You might not be able to finish creating your emergency fund in one year, but contribute as much as you can afford.
  • Plan for your protection needs. If you don’t already have the proper amounts of life and disability insurance in place, put it on your “To Do” list for 2014. Also, if you haven’t taken steps to protect yourself from the considerable costs of long-term care, such as an extended nursing home stay, consult with your financial professional, who can suggest the appropriate protection or investment vehicles. You may never need such care, but that’s a chance you may not want to take — and the longer you wait, the more expensive your protection options may become.
  • Don’t overreact to market volatility. Too many people head to the investment “sidelines” during market downturns. But if you’re not invested, then you miss any potential market gains— and the biggest gains are often realized at the early stages of the rally.
  • Focus on the long term. You can probably check your investment balance online, which means you can do it every day, or even several times a day — but should you? If you’re following a strategy that’s appropriate for your needs, goals, risk tolerance and time horizon, you’re already doing what you should be doing in the long run. So there’s no need to stress yourself over the short-term movements that show up in your investment statements.
  Do whatever you can to turn these New Year’s resolutions into realities. Your efforts could pay off well beyond 2014.

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.

Assumptions can be dangerous to investors

  • Written by Scott Johnson

Scott-Johnson---Head  Every day of our lives, we make assumptions. We assume that the people we encounter regularly will behave in the manner to which we are accustomed. We assume that if we take care of our cars, they will get us to where we want to go. In fact, we need to make assumptions to bring order to our world. But in some parts of our life — such as investing — assumptions can prove dangerous.
  Of course, not all investment-related assumptions are bad. But here are a few that, at the least, may prove to be counter-productive:
  • “Real estate will always increase in value.” Up until the 2008 financial crisis, which was caused, at least partially, by the “housing bubble,” most people would probably have said that real estate is always a good investment. But since then, we’re all more painfully aware that housing prices can rise and fall. That isn’t to say that real estate is always a bad investment — as a relatively small part of a diversified portfolio, it can be appropriate, depending on your goals and risk tolerance. But don’t expect endless gains, with no setbacks.
  • “Gold will always glitter.” During periods of market volatility, investors often flee to gold, thereby driving its price up. But gold prices will fluctuate, sometimes greatly, and there are risks in all types of gold ownership, whether you’re investing in actual bars of gold or gold “futures” or the stocks of gold-mining companies.
  • “I can avoid all risks by sticking with CDs.” It’s true that Certificates of Deposit (CDs) offer a degree of preservation of principal. But they’re not risk-free; their rates of return may be so low that they don’t even keep up with inflation, which means you could incur purchasing-power risk. Again, having CDs in your portfolio is not a bad thing, but you’ll only want to own those amounts that are suitable for your objectives.
  • “The price of my investment has gone up — I must have made the right decision.”
  This assumption could also be made in reverse — that is, you might think that, since the price of your investment has dropped, you must have made the wrong choice. This type of thinking causes investors to hold on to some investments too long, in the hopes of recapturing early gains, or selling promising investments too soon, just to “cut their losses.” Don’t judge investments based on short-term performance; instead, look at fundamentals and long-term potential.
  • “If I need long-term care, Medicare will cover it.” You may never need any type of long-term care, but if you do, be prepared for some big expenses. The national average per year for a private room in a nursing home is nearly $84,000, according to a recent survey by Genworth, a financial security company. This cost, repeated over a period of years, could prove catastrophic to your financial security during your retirement. And, contrary to many people’s assumptions, Medicare may only pay a small percentage of long-term care costs. You can help yourself by consulting with a financial professional, who can provide you with strategies designed to help cope with long-term care costs.
  You can’t avoid all assumptions when you’re investing. But by staying away from questionable ones, you may avoid being tripped up on the road toward your financial goals.

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.