JR: Although this is a much more complicated
example. Will it still be around? JR: Most analysts believe that people over 40 (45 and up) will probably still receive Social Security. There may be more modifications in the amounts and ages of eligibility for some people in this group. MM: What about saving for a child’s college education? What happens to the money if he doesn’t go to college? JR: Some education accounts allow flexibility, but many do have penalties if the For example: money is used for something other Retirement Income Need = $56,250 (75% of $75,000) than education. Depending upon the Social Security Income = - $21,600 amounts you save and your overDifference needed = $34,650 all financial situation, it may make You will need: $34,650/year divided by 4 percent more sense to save enough for colwould equal a retirement savings of $866,250. lege but keep the account available for other purposes as needed. MM: What if I can’t save that much? MM: What should I save for first: my retirement or my child’s education? JR: Keep in mind that there may be many other ways to achieve the income needs or live on less JR: Many advisors prioritize retirement goals than this example. Trying to save the $866k before education goals. This is mainly because would depend on your age, investment choices, the retirement needs are much larger and there amount you save, etc. For this area, compreare few alternatives if you fail to plan and save hensive planning as early as possible is still the effectively. College expenses may be defrayed by scholarships, loans and grants, whereas best solution for a comfortable retirement. MM: You mentioned Social Security in your retirement has no such options. question, there are some simple guidelines. 1) Determine how much of your current income you would need to live on during retirement – 70 percent, 80 percent, etc. 2) Subtract the amount of income you will receive during retirement (pension, Social Security) from that number. 3) Take the difference between these two numbers and divide by 4 percent.
WILL YOU? Our second expert: Attorney Thurston Debnam, partner at Smith Debnam Narron Drake Saintsing & Myers, LLP in Raleigh. Debnam has seen firsthand what can happen if you die without a will. “Several years ago I had a client who refused to make the serious decisions that are required for drafting a Last Will and Testament. Consequently, the client died without a will. He was survived by a wife and three children. Two of the children were minors. The client’s main assets included valuable farmland, which the client had purchased in his sole name. Without a will, the widow and children inherited the farmland. “A couple of years after the client died, his family needed to sell one of these farms in order to generate cash,” continues Debnam. “With a will, the client could have placed the property into a trust which would have allowed for it to be sold in a normal business transaction. However, without a will, the family was required to employ legal counsel, have a guardian appointed for the minor children, petition the court to allow for the sale of the
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