Category: Uncategorized


Our Office Hours

By Julie Leone,

We will resume normal offices starting this Friday, September 6th- our office will remain open until 5 pm Monday-Friday.

Fall is a wonderful time to schedule an appointment so that we can sit down one on one and review your financial path.

We are here for you at 315-471-2672.

Interesting Study: Benefits of Working with an Investment Advisor

By Julie Leone,

A recent study performed by Charles Schwab found that only one in five self-directed brokerage account participants worked with an advisor in the second quarter of 2019, but those who did had larger balances than non-advised participants. Past performance is no indication of future performance.

To read the entire reports please click on the link here: Study Investment Advisory

 

Blue Ocean Strategic Capital, LLC was established in 1997.  Our continuous dedication to high-quality service along with a client-centric approach has allowed the company to grow significantly and we now provide planning and asset management for individuals, retirement plans and charitable organizations in fifteen states. We are here to assist you in your individual concerns and goals.

 

 

 

 

 

Are You on Track? Financial Planning Goals for Every Decade of Your Life

By Elizabeth Higman,

Are You on Track? Financial Planning Goals for Every Decade of Your Life

Your career and lifestyle look completely different when you’re in your 20s compared with when you’re in your 60s: Your financial focus and planning in each decade should follow suit.

Each decade is riddled with its own risks and problems, so it’s important to know what to expect. Which decade can you afford to take more risk? Which decade should you really start to plan for retirement? Which decade should you focus on managing debt?

Set yourself up for future financial success by living each decade to its fullest.

Written by Jamie Hopkins, Esq., LLM, MBA, CFP®, RICP®. He serves as Director of Retirement Research at Carson Wealth and is a finance professor of practice at Creighton University’s Heider College of Business. His most recent book, “Retirement: Rewiring The Way You Think About Retirement,” details the behavioral finance issues that hold people back from a more financially secure retirement.

Are You on Track? Financial Planning In Your 20s

Planning In Your 20s

Tip No. 1: Invest in Yourself
When you are in your 20s and just starting a career, take time to invest in yourself. This might mean going back to school to earn a master’s degree or professional certification. Take the time to grow your human capital, life experiences and knowledge — it doesn’t get easier to invest in yourself later on in life.

Tip No. 2: Build Your Positive Financial Behaviors
Start by saving. Put money into your employer’s 401(k) or set up an IRA. Even if you can only put a few hundred dollars away, work on developing and automating your savings.

Tip No. 3: Take Some Risk
When you’re young is the best time to take risk. It’s true from both an investment standpoint and a life standpoint. When investing, look for equities and don’t invest too conservatively — you have a long time horizon to let your money grow.

Take risks in life, too. Look for start-ups and opportunities that will let you grow and flourish. I know many young people just want a sure thing in their first job. However, a company that will grow and help you grow might be a better fit in the long run.

Are You on Track? Benchmarks for Your 20s

A rule of thumb for your 20s:
By the end of your 20s, try to develop an emergency fund that holds three to six months of your living expenses in cash or an easily accessible investment with low risk.

How much you should have saved by the end of your 20s:
An amount that’s one to three times your starting salary.

Are You on Track? Financial Planning In Your 30s

Planning In Your 30s

Tip No. 1: Manage Your Debt
In your 30s it’s vitally important you manage debt obligations carefully. If you have student, personal or car loans, credit card debt or a mortgage, you need to have a plan for how to pay them off — and which ones to tackle first. From a behavioral standpoint, some suggest you should tackle low-balance accounts first, to get the satisfaction and reinforcement of quickly paying them off. On the other hand, a financial planning approach suggests you tackle high-interest-rate debt first to save on interest costs. Either way, get a plan, and get started. What really matters is that you don’t overborrow.

Tip No. 2: Get Proper Insurance Coverage
One of the biggest risks for many people in their 30s is they’re still acting as if they’re invincible. This leads to many people being underinsured. Make sure you have the right health care coverage, car insurance, property and casualty for your home, disability insurance and life insurance. Especially as your wealth starts to grow — perhaps along with a family — your insurance and financial needs will continue to change.

Tip No. 3: Start Building Up Retirement Assets
Hopefully your career is blossoming and you’re able to set aside money. This means increasing how much you’re saving for retirement. If you work with an employer that offers a 401(k), consider increasing your salary deferral. If you run your own company, look into setting up a SEP or SIMPLE IRA to help you set aside more money each year for the future.

Are You on Track? Benchmarks for Your 30s

A rule of thumb for your 30s:
By your mid- to late 30s, it’s ideal to be saving anywhere from 10% to 15% of your income each year for the future. The more the better. Remember that saving an additional 1% of income each year can lead to tens of thousands more money saved for retirement.

How much you should have saved by the end of your 30s:
An amount that’s three to six times your current salary.

Are You on Track? Financial Planning In Your 40s

Planning In Your 40s

Tip No. 1: Build Your Wealth
In your 40s, you’ll likely hit your peak earning years. This means it’s actually time to start building your wealth. Make sure your investments are properly aligned with your future goals and continue to be heavily invested in growth assets.

Tip No. 2: Cut Back on Unnecessary Expenses
By your 40s, you’ve probably picked up some unnecessary spending habits or costs along the way. Now is a good time to review your overall budget, spending and expenses. Perhaps you have too many entertainment subscriptions, are paying too much for your phone bill, or your car doesn’t fit your lifestyle. Any of these things could be changed and perhaps bring down your spending.

Tip No. 3: Take Care Of Yourself
The midlife crisis can start to sneak up on people in their 40s. Many people feel burned out or stressed at work — it’s important to take care of yourself. Set aside time to do financial planning and wellness. Taking control of your finances can help you take care of yourself and reduce stress. Burning out could negatively affect your health and finances and add additional layers of stress onto an already challenging situation.

Are You on Track? Benchmarks for Your 40s

A rule of thumb in your 40s:
Focus on increasing your savings and investing heavily in long-term growth assets, such as equities and other investment growth assets.

How much you should have saved by the end of your 40s:
Six to 10 times your current salary.

Are You on Track? Financial Planning In Your 50s

Planning In Your 50s

Tip No. 1: Get a Grip on Retirement Income Planning
Retirement income planning should start in your 50s. This means sitting down and seeing how much you have saved, listing your expenses and figuring out the income you can generate in retirement. If there’s a shortfall projected, you still have time to restructure your plan. That could mean saving more or cutting expenses. It’s also a good time to look at other retirement income sources, including a deferred income annuity, and to review your investment allocation.

Tip No. 2: Look into Long-Term Care Planning
While long-term care planning is not what everyone dreams about for their 50s, it’s likely the best time to do planning. With retirement starting to creep into your mind, one of the biggest risks you face in retirement should also be front and center. Long-term care insurance and funding strategies are best purchased and reviewed in your 50s. Once you get into your 60s, it can be harder to qualify for long-term care coverage. Take a look in your 50s and decide if it makes sense for you.

Tip No. 3: Think About Family and Next Generation Planning
In your 50s you might be getting pressure from both sides of your family — your parents, who are likely well into retirement now, and your children. Planning for how you’ll help everyone in your family is crucial, both your children and parents. For children, hopefully you started saving for college expenses as soon as possible, but you need to discuss other financial topics as your children migrate out of the home. But just as important, you need to discuss how you will support and take care of aging parents. All of this planning needs to start with open and honest conversations at the family level.

Are You on Track? Benchmarks for Your 50s

A rule of thumb in your 50s:
As you start to think about retiring and wonder if you have enough saved, a good rule of thumb is to have saved 25 times what you plan to spend each year in retirement. So, if you want to spend $100,000 a year from your savings in retirement, you should retire with $2.5 million. This figure doesn’t take into account any income you might receive from Social Security or a pension, which could significantly lower the amount you need saved. But let’s say your Social Security is $40,000 a year. Well then your investments only need to provide $60,000 a year, or $1.5 million, which is still a lot. However, most retirees do not need $100,000 of cash flow to meet their needs. But since you still have time until retirement in your 50s you can start to increase your retirement savings or even plan to work longer. By working longer you can reduce the amount of money you need saved for retirement and allow yourself more time to save money.

How much you should have saved by the end of your 50s:
Eight to 15 times your current salary.

Are You on Track? Financial Planning In Your 60s

Planning In Your 60s

Tip No. 1: Turn Savings into Retirement Income
You’ve spent your whole working career saving, investing and paying off bills. Now it’s time to turn your savings into retirement income. This decision requires a lot of planning because you need to make this money last for the rest of your life — and no one knows how long that’ll be. Working as long as you can and deferring Social Security are two ways to help ease longevity concerns.

While a lot of people call longevity a risk, it’s a good thing. However, it does make other risks, like health care, long-term care and inflation, more dangerous to the sustainability of your retirement income. So, get a plan in place and know how you’ll generate income, when you plan to retire, when to claim Social Security and when to put the plan in motion.

Tip No. 2: Re-Evaluate Work and Meaning
Retirement is not just a financial planning topic, it’s a long and real part of your life. Finances are just a means to an end — the end is your goals and what you want to accomplish in retirement.

Make sure you take the time to envision what life will be like after you stop working. Take a look at what you want to do and consider phasing into retirement by going part-time. If you’re single, retirement could be more challenging for you since you leave behind the relationships you’ve built in your workplace.

Staying engaged during retirement is important. For those who might become isolated, it’s crucial you have a plan on how you’ll find meaning, happiness and value in retirement.

Tip No. 3: Brush Up on Your Estate Planning
While you should start your estate planning basics early in life, when you near retirement, it’s good to do a full overview of your estate planning. This can include reviewing what insurance you have and whether it’s still needed or if you need more. You also need to review your estate planning documents to make sure they’re in order and that all of your assets are properly titled. Do another beneficiary review, especially as assets start to get turned into retirement income.

Are You on Track? Benchmarks for Your 60s

A rule of thumb in your 60s:
As you head into retirement, make sure you understand the 4% safe withdrawal rate for retirement spending. The rule states that historically in the U.S., with a 50% bond investment and a 50% stock investment, you could afford to spend 4% of your investments a year and not run out of money for 30 years. This is a conservative approach, but it does give a good starting point on how much you can spend in retirement.

How much you should have saved by the end of your 60s:
10 to 25 times your current salary, depending on spending goals and other income sources.

Are You on Track? Financial Planning In Your 70s

Planning In Your 70s And Beyond

Tip No. 1: Enjoy Life
You’ve worked hard your whole life, and you should enjoy your retirement. Having a sound financial plan that shows what you can spend and how long your money will last can allow you to do just that. A lot of people worry about having enough money in retirement, so they hoard their money, refuse to spend it and ultimately don’t enjoy themselves. They’re too fearful about the uncertainty of the future. Having a plan can help you live the lifestyle you want.

Tip No. 2: Make Your Money Last a Lifetime
A big part of planning for retirement while working and is about saving, investing and growing your wealth. Once you get into retirement, you need to monitor how your plan is doing and make any adjustments necessary. Your situation, the markets and your goals will change as your lifestyle changes. As such, you can’t stick with one plan from the first day of retirement to day 10,000 (nearly 27 years into retirement).

Don’t forget to plan and manage your required minimum distributions (RMDs) from IRAs and 401(k)s. Optimizing these assets can require new types of planning and tax strategies. As you start to spend down your money, keep track of your spending percentage of your assets. Use the 4% rule to help monitor your plan over time. If your withdrawal rate from your assets starts nearing 8% to 10%, you might want to consider cutting back on expenses. On the flip side, if your spending percentage of your overall assets drops down below 3%, you could actually increase your spending.

Tip No. 3: Complete Your Legacy and Charitable Planning
You should have started estate planning well before your 70s, but when you enter retirement you’ll have more time and energy to focus on leaving behind a legacy. Legacy planning isn’t just about taxes and estate planning — it’s more about meaning and impact. It can mean passing on security to family members, giving back your time to charities, or funding a worthwhile and meaningful initiative you care deeply about. Giving back in retirement will keep you more engaged and reduce the likelihood of becoming isolated and suffering from depression.

Additionally, after you hit age 70½ and need to take RMDs from an IRA, some great charitable giving strategies, like qualified charitable distributions (QCDs), are available to retirees. QCDs allow you to take a distribution in an IRA, send it directly to a charity, help offset your RMD requirements for the year and have it not treated as part of your taxable income.

Are You on Track? Benchmarks for Your 70s

A rule of thumb for your 70s and beyond:
Now that you’re in retirement, you need to track your spending and the longevity of your retirement portfolio. The biggest rule of thumb is realizing you might be underestimtating your life expectancy. For instance, for those who are alive at age 65, there’s a greater than 50% chance for a couple that one individual will live to 90 and almost a 25% chance one will live to 95. Plan to have many years ahead of you. Longevity isn’t a risk — it’s a gift for those who plan. Don’t plan for the middle, plan for the end point.

How much you should have saved for retriment by age 70 and beyond:
Honestly, it’s no longer time to be thinking about savings. Instead, it’s time to be thinking about income. If you want to make your money last, your withdrawal rate has to be reasonable. If it gets up to 10% of your portfolio balance per year, you have a risk of running out of money. Try to keep it closer to 4 % to 5% of your total wealth that you’re spending down.

To read the original article, visit Kiplinger’s website.

Labor Day Hours

By Elizabeth Higman,

Our offices will be closed Labor Day—Monday, September 2—and we will resume normal business hours on Tuesday, September 3. We hope everyone enjoys a safe and happy long weekend!

Special Labor Day Hours for BOSC

 

 

 

 

3 Habits That Sabotage Your Savings

By Elizabeth Higman,

If you’re struggling to save for the future, you’re not alone. One in five Americans has no savings at all, a survey from Northwestern Mutual found, and money is the No. 1 source of stress among U.S. adults.

Regardless of what you’re saving for — retirement, your kids’ college fund, the down payment on a house — it’s not easy to set aside money for those goals. This is especially true if you don’t have much extra cash to spare. Approximately 20% of Americans spend more than they earn, a report from the FINRA Investor Education Foundation noted. Furthermore, an additional 36% of people spend roughly the same amount that they earn, meaning less than half of adults have cash to save at the end of the month.

Even if money is tight, that doesn’t mean it’s impossible to save; it just means you may need to make some lifestyle adjustments. You don’t necessarily need to slash your budget to the bare bones to find money to put away, but there are a few common financial habits that could be doing more harm than good.

3 Habits That Sabotage Your Savings

1. Not tracking your spending

Tracking how much you spend each month isn’t the most exciting task, but it’s the only way to tell whether you’re overdoing it in certain areas of your budget. You may feel as if you’re stretched to the limit financially, but it could be you’re just spending more than you realize on unnecessary expenses.

Nowadays, tracking your expenses doesn’t have to be difficult or time-consuming. There are several apps that can help you stay on top of it with minimal effort, and you can also set limits and create alerts for when you overspend in a certain category.

Once you know exactly how much you’re spending each month and what it’s for, it will give you a better idea of where you can make cuts to put more cash toward your savings. You also may not need to make drastic reductions to meet your savings goals. Sometimes, all it takes is cutting $10 or $20 per month across multiple categories to save a couple of hundred dollars per month.

2. Spending too much on impulse purchases

The average American spends around $5,400 per year on impulse purchases, a survey from deal-sharing platform Slickdeals found. That amounts to around $324,000 over a lifetime.

Impulse purchases are tempting because alone, they seem insignificant. After all, how much effect could a $2 candy bar or $20 shirt have in the long run financially? But when you add up all those purchases, they can have a serious impact on your ability to save.

Say you’re trying to save for retirement, and instead of spending $5,400 per year on impulse purchases, you invest that money in your retirement fund earning a 7% annual rate of return. After 30 years, your savings will amount to around $510,000.

Keeping your impulse spending in check can be more challenging than it sounds. The majority of people buy on impulse because they think they’re getting a good deal, Slickdeals found. But if you’re not going to make good use of the product, it’s still a waste of money — no matter how great the deal was. Before you buy anything, ask yourself whether this purchase is necessary or in your budget. It’s OK to splurge every so often to treat yourself, but make sure those purchases are planned and accounted for so you don’t blow your budget with impulse spending.

3. Putting off saving until you have more to save

It’s tempting to tell yourself that the reason you can’t save now is because you can’t afford it, and you’ll start saving more once you finally earn that raise or begin a new job with a higher salary. But wait too long to start saving, and it will be exponentially more difficult to catch up.

This is especially true for larger, long-term goals like saving for retirement. You may need upward of $1 million saved to retire comfortably, and it takes several decades to save anywhere near that amount. Say, for instance, you want to retire at age 65 with $1 million in your retirement fund. If you were to start saving at age 25, you’d need to stash away around $425 per month to reach that goal, assuming you’re earning a 7% annual rate of return on your investments. But if you wait until age 35 to start saving, you’d have to save roughly $900 per month, all other factors remaining the same.

Even if you don’t have much to save now, it’s better to set aside what you can rather than putting it off for another day. Wait too long, and you may end up like the half of U.S. adults age 55 and older who don’t have a penny saved for retirement. That day will be here before you know it, and the earlier you start saving, the easier it will be to reach your goals.

No matter what financial goal you’re saving for, stashing money away isn’t easy. But you may unknowingly be making it more challenging than it needs to be by falling victim to these dangerous financial habits. Once you’re aware of how they affect your bank account, though, saving may not be as difficult as it seems.

To read the original article, visit The Motley Fool.

Do you have an Estate Plan?

By Julie Leone,

One of the most important ways you can plan for your future is through estate planning.

In general, estate planning is the process of creating a plan detailing how your assets will be managed during your lifetime and who will inherit your estate to carry out your wishes once you have died. Regardless of the dollar value of an estate, every adult needs an estate plan.

According to Forbes, 51% of Americans ages 55-64 do not have wills. This is unfortunate as all states have a legal system in place to handle your estate in the event that you die without your affairs in order. A life-changing crisis can happen at any time, leaving you vulnerable to losing your life’s work and finding yourself in an unfortunate situation that could have been avoided through proper planning. Too many people put off estate planning until it is too late.

We here at BOSC, LLC would like to assist you in the process as your trusted financial advisor.  Together we can proactively help in determining the best ways to avoid messy probate, financial, or family issues, and ensure you maximize the amount of property you are able to pass on to your heirs. Please give us a call (315.471-BOSC) so that we can begin the planning phase and assist you on the right path. 

 

The following article from Fidelity Investment, 10 Estate Pitfalls to Avoid is a great way to begin the discussion of estate planning.

 

People With a Financial Adviser Say They Aren’t Just Better With Money — They’re Happier With Life Overall

By Elizabeth Higman,

People with a financial adviser say they aren't just better with money — they're happier with life overall

There’s no right or wrong approach to managing money, but many people find that it pays to hire help.

For the latest installment of its Planning and Progress Study, Northwestern Mutual surveyed 2,000 American adults and found that financial stability plays an outsized role in a person’s overall life satisfaction.

According to the survey results, 92% of people say nothing makes them happier or more confident in life than having their financial house in order. While only about one-third of the survey respondents said they have worked with a financial adviser, those who do report much greater financial stability.

Sixty-six percent of the survey respondents who have a financial adviser said they feel financially secure, compared to 30% of those who don’t pay for professional help. A whopping 85% of respondents who work with a financial adviser feel their personal life is headed in the right direction, compared to 71% of those who don’t have an adviser. And seven in 10 respondents who have an adviser said they’re happy with their life, compared to five in 10 people who said the same but handle their money on their own.

Further, people who work with a financial adviser are more likely to know how to balance spending now and saving for later; set specific goals and feel confident that they will achieve those goals; and have a plan in place to weather economic ups and downs, according to the survey.

What does a financial adviser do?

Financial adviser is a catch-all term that usually includes financial planners and investment advisers. A good certified financial planner can help organize your overall financial picture, including setting up a retirement saving and investing strategy; planning for big expenses, like buying a house or having kids; everyday budgeting and spending; plus tax and estate planning.

You may also consider hiring a financial planner if you’re too overwhelmed or confused by your money to make big financial decisions, including how to balance multiple financial goals, manage a business, get out of crushing debt, or establish a retirement savings plan. If the alternative to meeting with a financial planner is decision paralysis, you’re better off seeking outside advice.

Investment advisers typically focus on the nuances of your investment strategy, such as what stocks or funds to buy in and out of your retirement accounts and how to minimize taxes. They can also manage your investments, but usually charge a fee of 0.5% to 2% of the portfolio. You don’t have to be a sophisticated investor with millions in the market to have an investment adviser, but you probably don’t need one if you just want to know how to invest a few thousand dollars or which funds to choose in your retirement accounts.

Keep in mind that it’s best to look for financial advisers who follow the fiduciary rule, meaning they operate in their clients’ best interest, and are fee-only. This means client fees are their only compensation and they don’t earn commission when you invest in certain funds or buy financial products.

To read the original article, please visit Business Insider.

What Is a Private Student Loan?

By Elizabeth Higman,

What Is a Private Student Loan?

Private student loans, like federal student loans, can be used to pay for college costs, but they originate with a bank, credit union or online lender rather than the federal government.

Private loans are best used to fill a college payment gap after maxing out federal loans. Federal loans are preferable to private loans for several reasons:

  • You don’t need a credit history or a co-signer.
  • The interest rate on federal loans tends to be lower.
  • Federal loans offer benefits like income-driven repayment options and forgiveness opportunities.

To get a federal loan, submit the Federal Application for Federal Student Aid, or FAFSA. You don’t need to complete the FAFSA to get a private loan, but you should do it anyway. The application is also the key to accessing free financial aid like grants, scholarships and work-study.

Who can get a private loan?

Private lenders look for borrowers who check off a few boxes:

  • A good credit score or a co-signer who has one.
  • A steady income or a co-signer who has one.

Most undergrad students need a co-signer to get a private loan. There are niche private lenders that don’t consider credit scores, but those loans carry higher interest rates.

Private graduate student loans may allow for a co-signer. Private parent loans usually won’t allow for co-signers, so borrowers need to meet these requirements.

How much you can borrow in private student loans

Private student loans don’t have the same limits federal ones do. You’re limited to $12,500 annually and $57,500 total in federal student loans. Graduate students can borrow up to $20,500 annually and $138,500 total.

Private loans max out at your college’s cost of attendance, minus any financial aid. Each lender may have its own limits for the total debt you can take on. For example, the private lender SunTrust limits annual borrowing up to $65,000 a year. Another lender, Ascent, limits borrowing to $200,000 over the borrower’s lifetime.

How long will you pay off a private student loan?

A private student loan repayment term varies by lender. Some offer only one 10-year repayment term, which is the standard term for federal loans. Others have terms ranging from five to 15 years.

Most private lenders allow you to defer payments until after you leave school. But some private lenders expect you to make small, interest-only or fixed payments while you’re enrolled. When you leave school, you usually get a six-month grace period before a bill arrives.

Your loan collects interest daily when you defer payments and during your grace period. When repayment begins, all the interest that accrued is tacked onto your loan total.

What kind of interest rate to expect with private student loans

Private loans typically have higher interest rates than federal loans. The higher your or your co-signer’s credit score and income are, the more likely you are to get a low interest rate.

It’s possible to get a private student loan interest rate that is lower than the federal rates. To do this, you’ll need excellent credit and a lender that offers rates below those offered by the federal government.

Most private lenders offer two options for interest rates: fixed and variable. A fixed rate stays the same throughout the life of the loan. A variable rate changes monthly or quarterly.

Always compare private student loan offers from multiple lenders. Interest rates aren’t the only thing to consider: Fees, repayment options and borrower protections are all important, too.

How to get a lower interest rate on private student loans

If you don’t get the best rate on a private student loan now, you can get a lower one down the road by refinancing. That means a private lender pays off your current loans and gives you a new loan with a lower interest rate and repayment term.

If you don’t get the best rate on a private student loan now, you can get a lower one down the road by refinancing.

You must meet any income requirements and typically have a credit score in the high 600s to refinance, or a co-signer who meets these qualifications. You can opt to refinance all of your loans or just the private ones. But if you refinance federal loans, you’ll lose all federal protections and repayment options.

To read the full article from Nerd Wallet, visit their website.

Fourth of July Office Hours

By Elizabeth Higman,

Our offices will be closed Thursday, July 4th and Friday, July 5th in observance of the holiday. We will resume normal business hours on Monday, July 8th.Fourth of July Office Hours