Welcome. The questions everyone worries about. Am I saving enough? Should I save more? Obviously, the answers vary from person to person and household to household. The go-to rule of thumb has been 20 percent of income should go to savings. Saving for the future is challenging regardless of your income given the ever present demands for your money TODAY. Read on for tips to help you start saving now.
You may have missed our recent series on retirement. For Retirement, Part 1 - Retirement Savings, click here. For Retirement, Part 2 - Social Security, click here. For Retirement, Part 3 - The Retirement Paycheck, click here.
If you need assistance on how best to save for your personal circumstances, we are here to help you stay On Course!
 Jennifer Lane, CFP
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How Much to Save
Begin by tracking your spending
- You have to know what you spend now to give yourself a framework to plan from.
- You learn the level of savings your cash flow can support by knowing what you spend!
- So, start tracking your spending now!
- You can choose among great budgeting tools such as MINT, YouNeedABudget, or Personal Capital.
Saving for emergencies
- Having an emergency fund is crucial to help cover those unexpected bills/life events.
- You want to have up to six months of spending readily available.
- Over time, build up to this cushion of cash in an interest savings account.
- Check out Bankrate or BestCashCow to find a high interest rate bank, generally online banks.
Prioritize savings
- Sometimes the biggest challenge with saving is determining where to direct the savings, e.g., college (saving or loan payoff), retirement, new home down payment, or home project.
- Ultimately, saving is a balancing act. Make sure you are doing what you can for retirement while juggling the other pieces of your life.
- Always, always take advantage of an employer match on a 401(k) or 403(b). It's free money!
- Focus on paying off debt -- highest interest first.
- If your income is below the threshold, contribute to a Roth IRA to take advantage of tax-free growth.
Financial planning
- Developing a financial plan that accounts for both short-term and long-terms goals will give you the clearest picture of how much you need to save.
- Find a fee only financial planner to help you build a financial plan and set savings target.
- NAPFA, CFP, and FPA all have "find a planner" links.
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The SECURE Act
Also known as "Setting Every Community Up for Retirement Enhancement Act." Passed in December 2019, the act has implications for investment, tax, and estate planning.
- The act pushed back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70 1/2 to 72 and allows traditional IRA owners to keep making contributions indefinitely as long as they have earned income.
- It should become easier for small business owners to set up "safe harbor" retirement plans that are less expensive and easier to administer.
- Many part-time workers could be eligible to participate in an employer retirement plan.
- The act mandates that most non-spouses inheriting IRAs take distributions over 10 years instead of their life expectancy.
- The Act allows 401(k) plans to offer annuities.
Jennifer answered questions about The SECURE Act during her recent segment on NECN. Click here to watch.
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Jennifer in the Media
Below are links to Jennifer's frequent contributions to financial planning articles.
- Jennifer contributed to the Bottom Line Inc article "Prepare your Finances for a Possible Recession." Click here to read the article.
- The New York Times featured Jennifer in an article titled, "Balanced Funds Don't Inspire Fear or Greed. That's Why They Are So Useful." Click here to read the article.
- With a contrarian view, Jennifer contributed to an article, "People are enraged by the idea that you should have twice your salary saved by the time you're 35!" published recently by Business Insider. Click here to read the article.
- Moving in together? Click here for the article from Business Insider, "Five questions you and your partner should answer before taking the biggest step in your relationship."
- Insider asked Jennifer to contribute to an article on old fashioned ways to manage your money, "Six money-saving tips your grandma used that are way more effective than any budgeting app." Click here for the article.
- Jennifer contributed to an article on Business Insider. Click here to read "This is the best way to do your taxes online - according to experts."
- CNN Money's Money Moves featured Jennifer in an article on how to strike the right balance between retiring early and saving enough. Click here to read the article.
- Jennifer contributed to a CNN Money article "When is the Right Time to See a Financial Advisor?" Click here to read the article.
- Jennifer contributed to The Wall Street Journal article "The Biggest Money Mistakes We Make -- Decade by Decade." Click here to read the article.
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Compass Planning News
- Jennifer recently talked about The SECURE Act. Click here to watch the segment on her blog.
- Compass Planning helped to sponsor YW Boston's two-part 2019 Elevating Lives Series.
- AdvisoryHQ named Compass Planning as one of the ten best Boston financial advisors. (Disclosures)
- Jennifer appears on NECN every other Monday morning at 9:30 am.
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Compass Planning Associates helps families, individuals, and small-business clients achieve financial security, knowledge, and control over their money. Our fee-only, client-centered approach provides education and guidance for achieving financial goals and dreams.
This newsletter and any linked references are for informational purposes only and are not to be construed as tax, legal, or investment advice. Compass Planning has gathered the information from sources it believes are reliable, but your individual situation can vary, and you should consult with your investment, accounting, and/or tax professional before taking any action.
All contents of this newsletter Copyright 2020 Compass Planning |
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Take the urgency and pain out of unexpected expenses by planning ahead. With an old car, for example, you should anticipate a regular amount of maintenance. Make an educated guess about how much repairs could cost yearly, then calculate how much you should put away each month or paycheck. Then you'll have the funds when you need them.
Get more tips in
Jennifer's book
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