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Impressive panel

  Ed McElroy, host of “The Ed McElroy Show”, Page-4-2-col-TVrecently interviewed Senator Bill Cunningham, (D) 18th Distict, left, and Dorothy Leavell, Publisher of Crusader Newspaper, right.

  That show will air at 8 p.m. on Tuesday and again on Oct. 15 on Comcast Channel 19.

Protect your retirement against market volatility

  • Written by Scott Johnson

Scott-Johnson---HeadAs an investor, you’re well aware that, over the short term, the financial markets always move up and down. During your working years, you may feel that you have time to overcome this volatility. And you’d be basing these feelings on actual evidence: the longer the investment period, the greater the tendency of the markets to smooth out their performance. But what happens when you retire? Won’t you be more susceptible to market movements?
You may not be as vulnerable as you might think. In the first place, given our growing awareness of healthier lifestyles, you could easily spend two, or even three, decades in retirement — so your investment time frame isn’t necessarily going to be that compressed.
Nonetheless, it’s still true that time may well be a more important consideration to you during your retirement years, so you may want to be particularly vigilant about taking steps to help smooth out the effects of market volatility. Toward that end, here are a few suggestions:
• Allocate your investments among a variety of asset classes. Of course, proper asset allocation is a good investment move at any age, but when you’re retired, you want to be especially careful that you don’t “over-concentrate” your investment dollars among just a few assets. Spreading your money among a range of vehicles — stocks, bonds, certificates of deposit, government securities and so on —can help you avoid taking the full brunt of a downturn that may primarily hit just one type of investment. (Keep in mind, though, that while diversification can help reduce the effects of volatility, it can’t assure a profit or protect against loss.)
• Choose investments that have demonstrated solid performance across many market cycles. As you’ve probably heard, “past performance is no guarantee of future results,” and this is true. Nonetheless, you can help improve your outlook by owning quality investments. So when investing n stocks, choose those that have actual earnings and a track record of earnings growth. If you invest in fixed-income vehicles, pick those that are considered “investment grade.”
• Don’t make emotional decisions. At various times during your retirement, you will, in all likelihood, witness some sharp drops in the market. Try to avoid overreacting to these downturns, which will probably just be normal market “corrections.” If you can keep your emotions out of investing, you will be less likely to make moves such as selling quality investments merely because their price is temporarily down.
• Don’t try to “time” the market. You may be tempted to “take advantage” of volatility by looking for opportunities to “buy low and sell high.” In theory, this is a fine idea — but, unfortunately, no one can really predict market highs or lows. You’ll probably be better off by consistently investing the same amount of money into the same investments. Over time, this method of investing may result in lower per-share costs. However, as is the case with diversification, this type of “systematic” investing won’t guarantee a profit or protect against loss, and you’ll need to be willing to keep investing when share prices are declining.
It’s probably natural to get somewhat more apprehensive about market volatility during your retirement years. But taking the steps described above can help you navigate the sometimes-choppy waters of the financial world.

 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.

Prepare yourself for the unexpected

  • Written by Scott Johnson

Scott-Johnson---HeadAre you ready for this?
September is National Preparedness Month. Sponsored by the Federal Emergency Management Agency (FEMA), National Preparedness Month seeks to educate Americans on preparing for natural disasters and other types of emergencies. But you’ll also need to prepare for unexpected events in many other areas of your life — particularly those events related to the financial security of you and your family.
Here are some of the most important of these events, along with possible preparations for them:
• Unanticipated early retirement – If you encounter a “downsizing” or other occurrence that results in the loss of a job, or even the end of a career, before you expected it, would you be able to avoid major disruptions to your lifestyle? To help prepare for such a loss of income, make sure to fully fund your IRA each year. The maximum contribution is $5,500 per year plus an additional $1,000 for those age 50 and older.
• Disability – Even a short-term disability can seriously harm your finances — and a long-term disability could prove devastating. Your employer might offer some form of disability insurance, but it may not be sufficient. So you may need to explore private coverage.
• Personal liability – If someone were ever injured on your property or due to some action of yours, you could face legal actions demanding hundreds of thousands of dollars. To help protect yourself, consider adding umbrella liability insurance.
• Changing family situation – Changes in your life — marriage, divorce, remarriage, children, stepchildren — can drastically affect your estate plans and the type of legacy you want to leave. To prevent unpleasant surprises for your family, make sure you periodically review beneficiary designations on your investment accounts, such as your IRA and 401(k), and work with your tax and legal advisors to update your estate-planning documents — will, living trust and so on — as needed.
• Outliving your money – Once you reach retirement, your greatest concern may be that you’ll outlive your money. To help prevent this from happening, create a sustainable withdrawal strategy — that is, determine how much you can take out each year from your investment and retirement accounts, and stick to this amount.
• Need for long-term care – You can’t predict whether you will ever need to enter a nursing home or require the assistance of a home health care worker, but one thing is for sure — these services are extremely expensive. Consider this: The national average for a private room in a nursing home is nearly $84,000 per year, according to a recent survey by Genworth, a financial security company. To help prepare for these costs, you may want to consult with a professional financial advisor, who can suggest appropriate solutions.
• Untimely death – Your absence could jeopardize your family’s financial security, particularly if you passed away while your children were still at home. To help ensure that your family could remain in the home and that your children could go to college, if they choose, make sure you have adequate life insurance.
Your passage through life will be filled with twists and turns, and you can’t always see what lies ahead. But you can ease your journey by preparing yourself for the unexpected.

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.

Make the right moves to leave a legacy to grandchildren

  • Written by Scott Johnson

Scott-Johnson---Head  On Monday, we observe National Grandparents Day.
  If you have grandchildren, they will hopefully mark this occasion by sending a card, making a call or, best of all, paying a visit. But however your grandchildren express their feelings for you, you undoubtedly have a very big place in your heart for them. In fact, you may well be planning on including your grandchildren in your estate plan. If that’s the case, you’ll want to do the best you can to preserve the size of your estate — without sacrificing the ability to enjoy life during your retirement years.
  Here are a few suggestions to help you achieve this balancing act:

  • Expect market volatility — and don’t overreact. If you’ve been investing for a while, you know that volatility in the financial markets is normal. In fact, it’s not unusual for the market to drop 10%, or even more, in a year. Try not to overreact to this type of volatility. For example, don’t immediately sell investments just because they’ve had a down year — they may well bounce back the next year, especially if their fundamentals are still strong.
  • Diversify. It’s always a good idea to diversify across a range of investment vehicles — stocks, bonds, government securities, certificates of deposit (CDs) and so on. While diversification can’t guarantee a profit or protect against loss, it can help reduce the effects of volatility on your portfolio.
  • Maintain a cash cushion. During your retirement years, you may face unexpected expenses, just as you did when you were working. To help pay for these expenses without being forced to dip into your long-term investments, try to maintain a “cash cushion” that’s sufficient to cover six to 12 months’ worth of living expenses.
  • Limit withdrawals from your investments. To keep your investment portfolio intact for as long as possible, set limits on your annual withdrawals. Your withdrawal rate should be based on a variety of factors — age at retirement, other sources of income, lifestyle choices, etc. A financial advisor can help you calculate a withdrawal rate that makes sense for your situation.

  • Delay your generosity. It can be tempting to provide for your grandchildren — and perhaps even your grown children — as soon as you can. But you need to balance this impulse with the financial challenges that two or three decades of retirement can bring. It’s not being “selfish” to take care of yourself first — in fact, by doing everything possible to remain financially independent, you will be helping your family in the long run.

  • Don’t delay creating your estate plan. If you are committed to leaving a generous legacy for your grandchildren, you need a comprehensive estate plan. And it’s best to create this plan as soon as possible, while you are mentally and physically healthy. You may never become incapacitated, of course, but the future is not ours to see. In addition to starting early with your estate plan, you’ll need to assemble the right team, including your financial advisor, legal professional and tax expert.
  You might enjoy receiving attention on National Grandparents Day. But you’ll get even greater pleasure out of knowing that you’re maximizing your efforts to leave the type of legacy you want for your grandchildren — while still enjoying the retirement lifestyle you desire.

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.

Avoid expensive errors when paying for college

Scott-Johnson---Head It’s just about back-to-school time again.
  If you have young children, you might be hustling them to the store for backpacks and binders. But if you fast-forward a few years, you can envision driving your kids a little farther — to their college dorms. And when that day comes, you’ll want to be financially prepared. So you’ll want to avoid making costly mistakes when preparing for, and paying, those big bills. Here are some of the most common of these errors:
  • Not saving enough — Only half of all families with children under 18 save any money for college, according to a recent study by Sallie Mae, the country’s largest originator of federally insured student loans. You might find it easier to save for college if you automatically move a set amount each month from your checking or savings account to a college savings vehicle.
  • Not considering vehicles with growth potential — The same Sallie Mae study found that more parents use a general savings account than any other method of saving for college. But since most savings accounts these days pay only a minimal rate of return, you will have trouble getting the growth potential you need to achieve your college savings goals. Consider working toward your college savings goals by investing in a vehicle specifically designed for college, such as a 529 plan or a Coverdell plan. There are differences between these plans, such as contribution limits and tax treatments, but both allow you to invest for growth potential. As with any investment account, there are risks involved, including market risk.
  • Stopping your savings once your children are in college — Unless your children plan to take an awful lot of credits, they’re not going to finish college in just one year. Consequently, you’ll want to keep investing in your plan or other college savings vehicle while your children are in school.
  • Taking out 401(k) loans — Your employer may allow you to take out a loan against your 401(k) to help pay for college. But this may not be a good idea for two reasons: First, when you remove money from your 401(k) — even if you plan on eventually paying it back — you will slow the potential accumulation in your account, thereby depriving yourself of resources you will eventually need for retirement. Second, should you leave the company, you might have to repay the loan within a limited number of days.
  • Not using available tax credits — Depending on your income, you might qualify for the American Opportunity tax credit, which is worth up to $2,500, provided you spend at least $4,000 on college expenses. Check with your tax professional to see if you qualify for this credit and how to most effectively incorporate it. And be careful you don’t waste the credit, because you may not be able to use it and your plan distributions at the same time.
  Paying for college can be challenging — but if you can avoid making the above mistakes, you’ve got a better chance of getting your kids through school without derailing the progress you’d like to make toward your other 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.