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lifeplanning GUIDE 2012

Beginner's Guide to Building a Budget

5 Tips for Cutting Debt

Countdown to Retirement: Smart Ways to Plan in Your 20s, 30s, 40s and 50s

Pop Quiz: Time to Crunch the Numbers! What Next? Rethinking How We Save

Care and Feeding of a College Fund

Seniors and Fraud

A Publication of the Lewiston Tribune and Moscow-Pullman Daily News


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4 | JANUARY 21, 2012 How to Build a For Fido and saving For How toFund Build aas for College FluFFy… Saving retirement Saving for college? Findare full-fledged How to think smarter College Fund Pets Retirement ing courage to take the members of many famiand plan better for retire-

Saving How to smarter and of first step for maycollege? be the big-Finding lies and increasingly partthink ment at every stage gest hurdleto take the first of mom courage step and dad’s planestate better life for retirement at plan may be unions: the biggest hurdle every stage of life and Credit saving Power to tHe PeoPle

on tHe way to a FinanCial Plan

investing

Tough economic times

5Credit Tips Cutting and unionsfor are lowOdds are, youSaving say you left many families with a cost, low-profile alternahave one – but you don’t. fearful question: Have Debt Investing tives to commercial Why your family needs a the old rules of saving banks andhousehold high banking finances financial planTough economic and investing Putting timeschanged left fees forever? on a firmer footing calls for many families with a fearPoP Quiz: time to deeper changes and fresh ful question:Beginner’s Have the guide old run tHe numBers 5 tiPs For Cutting deBt to Building a Increasing your financial thinking rules of saving and investing Budget Putting household security calls for clear changed finances on a firmer foot- thinking and focus. Take forever? A budget is the founda-

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JANUARY 21, 2012 | 5

Delaying Retirement Has Financial, Social Benefits The need to save for retirement is something professionals start hearing about from the moment they begin their careers. Whether it’s parents extolling the virtues of retirement plans or employers who encourage their employees to take advantage of their retirement programs, saving for retirement is never far from the minds of professionals. As important as such savings can be, many workers are deciding to delay their retirements. As much as men and women envision retiring to a faraway seaside villa for their golden years, such retirements are not terribly common, and many older workers have begun to recognize the economic and social benefits of delaying retirement. Those undecided about when they want to say goodbye to the office should consider the following benefits to delaying retirement. • Fewer years to worry about financing your lifestyle - Thanks to advancements in medicine and more and more people living healthier lifestyles, men and women are now living longer than in years past. • More chances to save money - It might be your dream to retire early, but you could be doing yourself a great disservice by ending your career prematurely. • Stay socially active - In addition to economic benefits, delaying retirement has social benefits as well. Many people get the bulk of their social interaction with colleagues and coworkers. • The chance to give back - Individuals who delay retirement can use their extra years around the office as an opportunity to leave a legacy for the next generation. Delaying retirement is growing increasingly popular. Men and women often see it as a chance to build a bigger nest egg and leave a more lasting legacy within their company and community.

Can you afford to retire?

YOU CAN’T CONTROL

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How to Build a College Fund

Saving for college? Finding courage to take the first step may be the biggest hurdle

as For Fido and FluFFy…

Pets are full-fledged members of many families and increasingly part of mom and dad’s estate plan

saving For retirement

How to think smarter and plan better for retirement at every stage of life

BUT YOU CAN CONTROL YOUR DECISIONS.

Credit unions: Power to tHe PeoPle

Credit unions are lowcost, low-profile alternatives to commercial banks and high banking fees 5 tiPs For Cutting deBt

Putting household finances on a firmer footing calls for deeper changes and fresh thinking

on tHe way to a FinanCial Plan

Odds are, you say you have one – but you don’t. Why your family needs a financial plan PoP Quiz: time to run tHe numBers

Increasing your financial security calls for clear thinking and focus.Take a minute and test your savvy

saving and investing

Tough economic times left many families with a fearful question: Have the old rules of saving and investing changed forever? Beginner’s guide to Building a Budget

A budget is the foundation of a solid financial plan. Here’s a real-world guide to setting one up

Sometimes the market reacts poorly to world events, but just because the market reacts doesn’t mean you should. Still, if current events are making you feel uncertain about your finances, you should schedule a complimentary portfolio review. That way, you can make sure you’re in control of where you want to go and how you get there. Call or visit your local financial advisor today.

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Beginner’s Guide to Building a Budget

Erica Sandberg has this simple advice for consumers thinking about creating a HOUSEHOLDBUDGET$ONTFORGETTHESMALLSTUFF4HATINCLUDESTHEMONTHLY manicure, the special holiday bottle of wine, the extra $20 on a birthday lunch for your best friend and that concert you’ve been dying to see. And don’t forget to consider what might happen: a flat tire, a broken tooth or a speeding ticket. Not figuring in life’s many little – and sometimes large – expenses can derail a budget. Sandberg, a personal finance expert and author of “Expecting Money: The Essential Financial Plan for New and Growing Familiesâ€? (Kaplan, 2008), says the key to a savvy budget is accounting for everything. “Be extremely comprehensive,â€? she says. “So many people tend to truncate their budgets. They divide their expenses into house, groceries, entertainment. That’s not enough categories. That’s not realistic.â€? Sandberg believes many consumers overthink a budget. “A budget is just cash flow – money coming in, money going out. If you think of it that way, it’s not so overwhelming.â€? Consumers who believe that a household budget boxes them in might have designed a plan that’s too inflexible, Sandberg says. “If they feel like they can only spend $300 a month on movies and theater, for example, it makes THEMFEELDEPRIVED"UTIFTHEYREALIZETHEYCANPULLMONEYFROMTHATENTERtainment area for, say, new tires for the car, it makes it more flexible.â€? The key to a successful budget is “a matter of manipulating it so you have money for necessities and things that are important to you,â€? Sandberg says. Knowing how much money you need and how much you have is paramount for successful budgeting. “Everyone should know off the top of their heads how much they net in a month after taxes. Then, think in terms of 10

A budget is the foundation of a solid financial plan. Here’s an easy, real-world guide to setting one up | by Deb Acord

percent,� Sandberg says. “Let’s say you bring home $2,000. Everybody who is past fifth grade math knows that 10 percent of that is $200 a month. Try to set that aside. Most people can do it if they try hard enough.� Sandberg suggests people who have credit card balances should try to think of them as loans and attempt to pay them off in six months. Take care of the balances with the highest interest rates first, a tactic that will help save money in the long run. Budgeting can be painful at first, but Sandberg reminds people that it does get easier. It’s like changing eating habits, she says. “At first, you pay really close attention to calorie counts and statistics. But later, it becomes pretty natural. It’s the same with a budget. Once you get used to living within your prescribed numbers, it becomes a part of you.� Here, tips for budgeting, from both finance expert Sandberg and the Federal Trade Commission: s$ETERMINEHOWMUCHMONEY you bring home each month. Include all income – from your job, gifts, tax refunds, unemployment or other government assistance, alimony or child support, pensions, Social Security and profits from sales of used goods. s$ECIDEHOWTOKEEPTRACKOF your finances. You can choose from phone apps, computer software or good old-fashioned paper and pencil. $ECIDEWHATSMOSTCOMFORTABLE s,ISTHOWMUCHGOESINTOASAVings account each month. The easiest to remember: 10 percent of your take-home income. s,ISTALLPREDICTABLEMONTHLY expenses – those that tend not to change, including rent or mortgage, a car payment, telephone, cable and Internet.

s,ISTMONTHLYEXPENSESTHATCAN vary – utilities, personal grooming, property taxes, insurance, gas and groceries. s,ISTOCCASIONALEXPENSES FOR things like manicures, getting your eyebrows waxed, office supplies, holiday gifts or entertainment. s!DDUPFIXEDANDVARIABLE expenses and divide by 12 for a monthly estimate. s)FYOUENDUPWITHEXTRAMONEY carry it over in a savings account for the next month. If you have credit card balances, pay them first instead of building a savings account. Having a savings balance and a credit balance can give you a false sense of financial security. s"EFLEXIBLE)FSOMETHINGUNEXpected comes up, such as un-reimbursed medical bills, take care of them by finding other places you can cut. s2EALIZETHATONCEYOUGETUSED to budgeting, it will become second nature. Š CTW Features

Learn more about‌ Managing your money at ftc.gov (select Consumer Protection and look for Money Matters, under What’s New) Making smart money decisions at extension.org/personal_ finance Setting up a template for your budget office.microsoft.com/ en-us/templates (search “home budgetsâ€?) Managing money online at mint.com Š CTW Features


JANUARY 21, 2012 | 7

Pop Quiz: Time to Run the Numbers

Mutual fund fees quietly add up. The difference of half a percentage point – a fund that charges 0.75 percent vs. a fund that charges 0.25 percent – costs an investor with $100,000 invested in mutual funds in a 401(k) account how much more per year? a. $50 c. $250 b. $100 d. $500

Don’t tell us you’re no good at math. Or, you forgot your calculator. Or, you have to get back to Angry Birds. Increasing your financial security calls for clear thinking and focus. Take a minute and test your savvy

Q 01

Q 02

What percentage of middle class Americans have no written financial plan? a. 19 c. 59 b. 39 d. 69

What’s the best strategy for paying off debts: a. Pay off smallest debts with a low APR first, in order to reduce your overall number of loans b. Concentrate on paying off the biggest debt with the highest APR first

Q 03

Q 04 a. 7,300 b. 17,300

The graduates of 2011 are the most indebted class in history, with an average student loan debt load of: c. $27,300 d. $37,300

How do you rate?

Q 05

Are the following statements about credit unions True or False? a. Credit unions are nonprofit financial insti-

tutions. b. Credit unions are owned and controlled by members, not profit-seeking shareholders c. Credit unions offer fewer services than regular banks d. Credit unions are restricted to employees of certain companies or organizations e. Profits at a credit union go back to members in the form of lower fees

Q 06

Postponing retirement until age 70, rather than claiming Social Security at age 62, results in a benefit that is:

a. 75 percent higher b. 55 percent higher c. 35 percent higher d. 15 percent higher

Q 07

Average life expectancy of a U.S. citizen: a. 68 c. 88 b. 78 d. 90

Q 08

In the wake of the great recession, what proportion of parents provide grown children financial assistance? a. 25 percent b. 33 percent c. 50 percent d. 66 percent

Q 09 Q 10

What’s the average wage for U.S. workers? a. $33,000 c. $53,000 b. $43,000 d. $57,000 What is the annual percentage rate on a new credit card? a. 12.99 percent b. 13.99 percent c. 14.99 percent d. 15.99 percent © CTW Features

10 correct: Warren Buffet wants to friend you! 9 correct: Close… less Angry Birds, more Suze Orman! 8 or less correct: It’s time to do some homework! 1. d: $500 per year 2. d: 69 percent 3. b: Although many people choose to eliminate small debts first, which makes them feel they are making progress, they’d save more money long-term if they paid off larger, higher-interest debt first 4. c: $27,300 5. a: T b: T c: F d: F e: T 6. a: 75 percent higher 7. b: 78 years 8. d: More than two-thirds, or 66 percent, double the rate of 20 years ago 9. b: $43,000 10. c: 14.99 percent as of Nov. 2011


8 | JANUARY 21, 2012

5 Tips for cutting debt

Brown-bagging will get you only so far. Putting household finances on a firmer footing calls for deeper changes and fresh thinking | by Marilyn kennedy Melia Thirteen-point-eight trillion dollars is a mighty big sum. Yet, for years, we hardly noticed it. Now it’s commanding our attention. From 2000 to 2008, Americans doubled the amount of mortgage and consumer debt they held, until it came to $13.8 trillion, according to the U.S. Federal Reserve. You know the rest of the story: The financial world collapsed and frightened consumers got out their calculators to total up their tabs. From the $13.8 trillion peak, households have reduced that debt by half a trillion dollars and counting. There’s still a long way to go, economists believe, before Americans achieve healthy balance sheets. Consumers have “learned the hard way that being approved for a loan and being able to afford that loan are two very different things,” says Kim McGrigg, community relations manager for nonprofit counseling agency Money Management International, based in Sugar Land, Texas. Even when the economy is back on track, households should abandon the “everyone is doing it, so it must be OK” spending mentality, McGrigg says. Instead, families and individuals should focus on their own personal financial security. Does a pile of bills stand between you and financial peace? Here are some new ways to approach making a dent in debt: Track whaT you spend

You’ve probably heard the conventional wisdom: Just give up your morning latte and you’ll find financial security. It’s more complicated than that, of course, but insignificant purchases can gobble big sums. Michael Collins, director of the Center for Financial Security at the University of Wisconsin, suggests keeping a list of everything you spend for at least a few weeks. By tracking every purchase, you discover what discretionary purchases can go; devote that sum to debt reduction. Make a budgeT

Even for those who are discouraged by debt, the word “budget” can spark even more disheartening visions of

denial. But budgets have the big benefit of ensuring that necessities are paid. Moreover, there are ways to budget to allow a "yes" to some purchases, says Stuart Vyse, a psychology professor at Connecticut College in New London, Conn., and author of “Going Broke: Why Americans Can’t Hold On To Their Money” (Oxford University Press, 2008). Vyse keeps two checking accounts. One is dedicated to necessary expenses; a monthly automatic deposit guarantees that money is there to pay the essentials. Experts advise choosing any system that allows you to separate money for necessities. Of course, it’s important to pay more than mini-

mums due on credit card debt. Additionally, Ithaca College (Ithaca, N.Y.) consumer psychology expert Michael McCall recommends that you designate some cash for splurges. Paying for the fun stuff in cash is important, he says, since studies show that we’re more reluctant to spend when we must fork over actual dollars. seT goals and work Toward TheM

Once you’re on a budget, you’re likely to replace the pleasure that once came with spending with the gratification of seeing debt disappear. “Specific short-term goals help keep people motivated,” Collins says. While it may be tempting to pay off debt with the smallest balance first – rewarding, because you see “progress” quickly – focus instead on paying off debt that carries the biggest APR. You’ll save more money in the long term by working down larger, higher-interest debts first. don’T grow old wiTh debT

Unfortunately, there is no standard

guideline on how much mortgage or credit card debt is dangerous, Collins says. But it's not smart to continue to rack up high-interest debt now, intending to pay it off sometime down the road. Older people who carry debt face a daunting challenge simply because they have a shorter time horizon to clear the slate before they retire. “Your income is going to shrink [in retirement], and if you’re still carrying credit card debt, then you could actually have negative cash flow each month,” warns John Ulzheimer of SmartCredit.com. While they may plan to extend work, debt-burdened pre-retirees usually must cut spending to the bone. “Educate yourself,” suggests Barbara Whitehead, co-author of “For A New Thrift: Confronting The Debt Culture” (Broadway Publications, 2008). Research ways to work down debt and learn how to allocate dollars between savings and debt reduction, she says. becoMe a relucTanT spender

How much of your debt is due to spending on things you thought you must have and now hardly care about? Instant gratification is responsible for a lot of the debt burden, Vyse says. Moreover, we’re subject to constant temptations. “The world has changed dramatically, “ he says. “In the 1970s, when we went home at night we were out of the marketplace. Now you can go online or shop anytime.” Before handing off your credit card, ask: “What harm would there be if I don’t buy this right now?” Wait a day and it’s likely you will have forgotten the item that would only add to your debt woes, Vyse says. © cTw Features


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On the Way to a Financial Plan Odds are, you say you have one, but you don’t. Why your family needs a financial plan | by Dan Rafter With the economy in turmoil, there’s rarely been a more important time for families to draft a detailed financial plan. Such a plan, including strategies for achieving big life milestones (education, buying a home and retirement), saving, investing and dealing with inevitable setbacks, can help steer families through challenging times. Few of us are prepared. Some 79 percent of people claim to have a financial plan, according to a 2011 survey by the Certified Financial Planner Board of Standards, but this number is misleading. Nearly half of those with a plan, 46 percent, say that it exists only in their heads; 11 percent say they only have written down some notes or ideas, not a complete plan. Financial planner Simon Singer says too many families spend more time planning a vacation than they do making decisions about their life’s finances. A financial plan, like a vacation, requires setting a destination and establishing an itinerary.“You need to know where you are going and how you’re going to get there,” says Singer, founder of Advisor Consulting Group, Los Angeles. Families need to know where they stand financially, even if their finances

Learn more about… Investing and consumer protection at investor.gov The basics of investing at investoreducation.org Effective ways to save at consumerfed.org (click on Financial Services) © CTW Features

are in disarray. Doug Hendee, certified financial planner for Brighton Securities, Rochester, N.Y., sees many families who ignore financial troubles in hopes they’ll simply disappear. “So many people are embarrassed to look at their finances,” Hendee says. “But ignorance in this case is not bliss. How will you know what you need to do if you don’t take a look at your financial situation to figure out where you stand? The good news is that crafting a financial plan doesn’t have to be an unpleasant chore. The most important part of any financial plan also is the simplest: a budget. A budget should take into account the money a family brings into the household each month. It also should list all of a family’s expenses. These should be divided into two main categories. Fixed expenses are those that don’t change from month to month: insurance payments, mortgage payments, student loans. Then there are discretionary or charges that fluctuate month to month, including utility bills, gas, entertainment spending and groceries. “Families need to know where their money is coming from and where it is going,” says Nancy Skeans, partner with Schneider Downs Wealth Management Advisors in Pittsburgh. “If they don’t understand that, it’s almost impossible for them to understand how much they can save and where they can cut expenses.” Families shouldn’t focus too much on the small details of a financial plan, Hendee says. What’s most important is that they start putting together a financial plan as soon as possible, even if it’s not yet complete. © CTW Features

In Search of a Financial Adviser The key to finding the right investment services provider is asking the right questions – both of yourself and of prospective providers. Following are some questions from the Coalition for Investor Education, a group of state securities regulators, consumer advocates and financial planning and investment advisers, to help you identify the right provider for you. Remember, there are no foolish questions. Any reputable provider should be happy to discuss these issues with you and answer any questions you may have. Do you need help developing strategies to reach your financial goals or do you simply want suggestions on appropriate investment products to implement your goals? Do you prefer working with someone who is primarily considered a salesperson, an adviser or a combination of the two?

Do you prefer paying for investment services through a fee, commissions, a percentage of assets in your account or a combination of these? How important is it to you that your provider have a legal obligation to act in your best interests and disclose potential conflicts of interest? © CTW Features

How involved do you want to be in decisions about your specific investments? Do you want assistance with a few targeted areas, or do you need a comprehensive plan for your finances? Do you already have a portfolio of investments you would like help managing?


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12 | JANUARY 21, 2012

How to Build a College Fund Parents looking to salt away money for both college and retirement can find themselves caught in a giant tugof-war. Do you make the sacrifice to fund a child’s college education and worry about retirement later? Or do you assume that you’ll find a way to cover college costs with loans or scholarships and focus on your own future instead? Gen Tanabe votes for retirement savings first. “The reality is, there is no financial aid for retirement. If you haven’t saved enough, your children may be left to shoulder the cost of your expenses,” says Tanabe, coauthor of “1001 Ways to Pay for College: Practical Strategies to Make Any College Affordable” (SuperCollege, 2011). Students will find a way with aid, jobs and loans, he says. Others believe maximizing savings now, for both retirement and college, is far preferable to planning a future built on student loans. “Every dollar [you borrow] will cost you two, on average, by the time you finish paying off a loan,” says Mark Kantrowitz, founder of college-cost resources Finaid.org and Fastweb.com. “When you’re saving, you’re keeping the interest. When you’re borrowing, you’re paying the interest.” Most experts agree that, if possible, you should save for both, early and often, particularly given the rising cost of tuition. The College Board found that college costs increased 26 percent in the past five years, an average that includes both four-year public and private schools. Parents have not been able to keep up. They were projected to meet just 16 percent of college costs in 2011, down from 24 percent in 2007, according to Fidelity Investments’ fifth annual College Savings Indicator Study, released in August 2011. But the Fidelity study also found that parents are changing their savings behavior. Some 40 percent of parents with children under age 5 started saving for college costs in a dedicated account, up from 27 percent in 2007. More of them are using a dedicated college savings account like a 529 plan. “Families are planning earlier and saving more efficiently, yet saving for college will continue to be a challenge,” says Joseph Ciccariello, a Fidelity vice president. Kantrowitz says college savings should begin before or immediately after the birth of a child. But he points out that it is never too late to start saving. For those who want to figure out how much they might need, Kantrowitz suggests setting a goal of one-third of expected college costs. “If you focus on the full amount, you’ll feel overwhelmed and you may not even get started,” he says. You should assume that a third of your college

Saving for college? Finding courage to take the first step may be the biggest hurdle | by Patricia Rivera not have to pay state taxes, either. You can withdraw the money taxfree for educational expenses at any time. This program, however, is best for individuals with modified adjusted gross income of less than $95,000, if single, or $190,000 for those who are married and who file taxes jointly.

expenses will come from savings, a third from future income (such as loans) and the last third from current income, employment and scholarships or aid. Use the cost of tuition the day your child was born as a point of reference. Start with as little as $100 a month, or whatever is feasible. “Once you’re in the habit of saving, it’s easier to save more,” Kantrowitz says. Here are some key ways to invest college funds wisely. Coverdell Education Savings Account allows families to contribute up to $2,000 per child per year. There are income limits. Like an individual retirement account, a Coverdell account can be invested in stocks, bonds, mutual funds, certificates of deposit or money market funds. As the money grows, you are allowed to defer paying federal income taxes. In many states you will

State-sponsored 529 college savings plans, available to families of all income levels, offer much higher contribution limits. Investors select from a platter of mutual funds and other investments. Earnings are tax-free as long as the money is used for qualified education expenses. “Unlike the Coverdell, the money that you invest into a 529 plan must be used for college-related expenses,” Tanabe explains. While 529 plans have proved popular, returns are not guaranteed. Declines in the value of 529 plans are unsettling to families, especially when students are nearing college age. States have added more conservative options to the plans, adding FDIC-insured certificates of deposits, savings accounts and age-based accounts that trim back stock investments in favor of less volatile options

Learn more about… Federal student loans at studentaid.ed.gov 529 plans at savingforcollege.com Your financial aid application at fafsa.ed.gov Inspiration for college at college.gov © CTW Features


JANUARY 21, 2012 | 13

Why Should You be doing Business with Us? We understand you have options when it comes to choosing a financial advisor or an insurance professional to help you meet your goals and objectives.

as children age. Investors can change asset allocation in 529 plans just once a year. You can participate in any state’s 529 savings plan regardless of where you live, although your state’s plan may offer state-tax breaks or other discounts. Buy a 529 either through a financial adviser or directly. Look for: Low expense ratio and other fees. Determine the annual account maintenance fees, transfer fees and commissions. Investments that are actively managed, such as mutual funds, carry higher fees than index funds. State benefits. Some plans include state-tax breaks. Others offer matching contributions. Study the options. Investment options. Look for a plan that gives you a good mix of investment tracks. Ease of changing account beneficiary. Should your child decide not to attend college, make sure you can change the beneficiary. Whatever you decide, select an option to automatically transfer money from your checking or savings account to your 529 college savings plan account, Kantrowitz says.

State-sponsored college plans in six states received the highest rating in 2011 from analysts at Morningstar, the Chicago-based investment research firm. Alaska’s T. Rowe Price CollegeSavings plan The Maryland College Investment Plan, managed by T. Rowe Price Nevada’s Vanguard 529 Savings Plan, managed by Upromise Ohio’s CollegeAdvantage 529 Savings Plan, managed by the Ohio Tuition Trust Authority The Utah Educational Savings Plan Virginia’s CollegeAmerica, managed by American Funds © CTW Features

From the beginning, we set out to create a business model that allowed us to be flexible in the product solutions we recommend to our clients and to be unbiased in those recommendations. In today’s complex world of investment and insurance products, we believe working with an independent financial services firm that is committed to putting their clients’ needs ahead of their own is critical. That’s what we do. We chose our broker-dealer affiliation carefully, choosing ING Financial Partners. Through this relationship, we are able to research and access a broad and diverse range of investment and insurance solutions for our clients through a robust and state of the art technology platform. Perhaps more importantly, ING Financial Partners requires no production commitments from our firm on any proprietary products or from preferred product partners thereby allowing Schrette & Lee to remain independent and flexible in our choice of product solutions for our clients. A very different approach from some other firms. So, whether you are in the wealth accumulation phase of your life, looking to generate income from your investments, or thinking about the wealth transfer phase of your life, Schrette & Lee has the knowledge, experience and resources to research and access investment and insurance solutions to help you achieve your goals.

stand how or if your state will handle a shortfall in the event the plan’s investments do not deliver expected returns. Some states have suspended or closed their plans after financial difficulties. Rebate programs such as Upromise or Babymint provide those who sign up with rebates that go into a 529 savings plan when you buy certain products – gasoline, clothing, food – from participating companies. “Again, the most important thing is to start saving, no matter how much it is," says Kantrowitz. “Every little bit helps.” © CTW Features

1407 16th Avenue, Lewiston, Idaho 83501 (208) 743-1943 or 1-888-743-1943 Paul Schrette

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Prepaid 529 college savings plans are the first cousins of 529 plans, Tanabe says. They allow state residents to pay now to lock in prices at a state university. A premium over the current tuition rate is factored in to cover future tuition inflation. Some states have programs that allow families to buy a fixed number of tuition credits at today’s prices. It’s important to read the fine print on prepaid 529 plans to under-

Top 529 plans

Why should you trust Schrette & Lee to help you with your investments and insurance needs? We believe it goes beyond our experience and is rooted in the foundation makeup of our firm.


14 | JANUARY 21, 2012

saving and investing: What next? Tough economic times pushed many families to the brink and left others with a fearful question: Have the old rules of saving and investing changed forever? | by dawn klingensmith Feeling distrustful of the stock market and insecure about your finances and investments? Financial adviser David Gottlieb sits down with people like you almost every day. Into his Pepper Pike, Ohio, office he welcomes an allAmerican parade of average savers and investors – newlyweds, single moms, families with kids to put through college, couples about to retire – most with a single uneasy question: Has the mortgage industry meltdown, the housing collapse and the rickety economy changed the rules of personal finances and investing? His short answer: No. Gottlieb does suggest that his clients make one radical change: Tune out the headlines. “I hear the same rant all the time about the president, the economy, the global economy, Greece. People are making decisions based on headlines and emotions,” which costs them in the end, says Gottlieb, a financial adviser for Edward Jones. Investors were clobbered with massive investment declines in 2008; however, the recession officially ended more than two years ago.Those who stayed the course have done well since 2009, compared with those who yanked money out of the stock market in a panic. “If anything, the economic climate reinforces basic financial principles,” says Ruth Ann Potts, manager of advanced planning at Country Financial in Bloomington, Ill. The aftermath of the great recession is a good time to review those basics and consider some new approaches, based not on doomsday newscasts but on your individual circumstances and goals. What have we learned since the great fall? A lot. takE a dEEp brEath and stay thE coursE

The market crisis of 2008 proved that diversification offers no guarantee against losses; however, it tends to reduce the damage. Maintain a diversified, balanced portfolio, Potts advises, and don’t let a market slump change your long-term investment plan. Historically, the market consistently and reliably recovers. A down market may even present an opportunity to add holdings and accelerate your recovery. But keep in mind that stocks are risky by definition; that’s why they have high expected returns. Just because the market historically recovers does not

401(k) account.“Focus on where you put new contributions,” she says. Funnel new contributions and investments “into vehicles you’re more comfortable with.” considEr safEr invEstmEnts

mean that your risk vanishes in the long run, no matter how long you hold onto a stock, warns Zvi Bodie, coauthor of “Risk Less and Prosper: Your Guide to Safer Investing” (Wiley, 2011). EmbracE your risk tolErancE

In the wake of the market crisis,“A lot of people realized they don’t have as much tolerance for risk as they thought and are making adjustments,” Potts says. Assessing risk tolerance used to be hypothetical: How will you sleep if your investments drop in value by 10 percent or 50 percent? Now, it’s real and observable: When the markets crashed, did you buy, hold or sell your stocks? Because you lock in losses if you unload stocks during a market slump, Potts recommends that risk-averse individuals not make adjustments to investments already tied up in a

Bodie believes that the riskiness of stocks is understated and that many investors have too much allocated to stocks and not enough allocated to safer, inflation-indexed investments. Risk-averse investors in particular should see how far a low-risk investment strategy will take them, and then make adjustments to meet savings and retirement goals.“For safety and protection against inflation, Treasury Inflation-Protected Securities and U.S. savings bonds called I Savings Bonds are unsurpassed,” says Bodie, a professor of management at Boston University.“Initial investment is guaranteed, and return is paid in inflationadjusted dollars.” don’t ovErcorrEct or undEr prEparE

Economic collapse made a big impression on young investors.“This painful economic environment has affected the risk appetite of the 20- and

learn more about… Financial planning at every stage of life at mymoney.gov Buying U.S. treasury securities online at treasurydirect.gov Using credit wisely at federalreserve.gov/consumerinfo/default.htm © ctW features


JANUARY 21, 2012 | 15

30-something set. At a stage in life Consumers also have been advised that If you are saving for a particular item has risen and wages have stagnated, where they can most afford to take on anytime they come by extra cash, such or event, consider opening a separate it’s no longer a no-brainer that any as a bonus, they should use it all to pay “earmarked and untouchable” account educational debt is good debt,” Thaadditional risk with their retirement savings, huge numbers of young folks down credit card debt. Gottlieb says just for that: “You almost need to kor says. “In the current environment, to use some or most of it to chip away are not,” says former portfolio manopen up different accounts for differ- it is essential to step back and think at your balance, but to keep the rest ager and financial literacy advocate ent savings goals so you won’t touch it. strategically about how much you are “just for the sake of having cash again Manisha Thakor, of Santa Fe, N.M. When you put everything in a general paying for an education relative to the and paying for things in cash instead of account, it gets spent,” says Gottlieb, “The problem with this is that it sets earnings you expect as a result. When them on a path to be under-saved for feeling broke all the time and charging who has an account designated for his investment isn’t as high 30-something set.their At a stage in lifethings.” recommends. 30-something At a stage inthe life return on recommends. retirement when they hit 50s and daughter’s bat mitzvah. “Iset. understand Beef up your emergency funds, too. as you’d like, it’s to think theymay canend mostupafford to take on If you are saving for a particular they afford to take on If time you are savingcrefor a particular 60s, andwhere thus they taking people will where fight me on can thismost and say additional risk with their retirement item or event,ofconsider a additional risk with their retirement item or event, consider opening a Having the equivalent three to opening six atively. That may mean living at home on too much risk when they can least [the money] is not making interest. separate “earmarked andsetuntouchseparate “earmarked and untouchsavings, huge numbers of young folks savings, huge numbers of young folks months’ salary or living expenses while going to school or taking a year afford to,are where are fewer years manager able” account just for that:“You But cash gives toportfolio buy not,”there says former portfolio are you not,”the saysability former manager able” account just for that: “You aside is still the recommended minior starting school on their and side.”financial literacy advocate things, not and borrow things. almost need to open up different almosteven need to open up different financial literacy advocate two off before mum, Potts says, but high unemployto live at home, work and save. Or, “The rate of return is not the issue," he accounts for different savings goals accounts for different savings goals Manisha Thakor, of Santa Fe, N.M.“The Manisha Thakor, of Santa Fe, N.M.“The ment rates and the struggling economy so you won’t touch it. When you put so you won’t touch it. When you pu with this is that it sets them problem withonthis is that it sets them start at a community college and then says. "It’s having money hand when Don’tproblem be retirementsuggest six to 12 months’ worth might everything in a general account, it everything in a general account, it on a path to be under-saved for retireretire- to a state school. you need it.”on a path to be under-saved for transfer rich and cash-poor be more prudent. gets spent,” says Gottlieb, who has an gets spent,” says Gottlieb, who has a ment when they hit their 50s and 60s, ment when they hit their 50s and 60s, “The point is to view education as any “People are putting money in 401(k)s In addition to an emergency reserve account designated for his daughter’s account designated for his daughter and thus they may end up taking on and thus they may end up taking on Treat education as but not in the bank,” Gottlieb says, other valuable asset and make sure the fund, have a “put-and-take” savings bat mitzvah. “I understand people bat mitzvah. “I understand people too much risk when they can least too much risk when they can least an investment adding that investors havethere somehow willunexpected fight me on this and say [the willthe fight me on investthis and say [the afford to, where are fewer years afford to, where there are fewer yearsjustifies account for day-to-day return up-front money] is not making interest. But money] is not making interest. But onimpression their side.” they need to ondebt theirnow side.” eclipses credit ment.” gotten the expenses like home appliance repairs or Student-loan cash gives you the ability to buy cash gives you the ability to buy © CTW Features retire with a million dollars. occasional splurges, Potts recommends. card debt. “As the price of education don’t bE rEtirEmEnt-rich and cash-poor

things, not borrow things. “The rate of return is not the issue," he says. "It’s having money on hand when you need it.”

don’t bE rEtirEmEnt-rich and cash-poor

The Clearwater Group at Morgan Stanley Smith Barney

things, not borrow things. “The rate of return is not the issue," he says. "It’s having money on hand when you need it.”

“People are putting money in 401(k)s “People are putting money in 401(k)s but not in the bank,” Gottlieb says, but not in the bank,” Gottlieb says, adding that investors have somehow adding that investors have somehow gotten the impression they need to trEat Education as gotten the impression they need to trEat Education as an invEstmEnt an invEstmEnt retire with a million dollars. retire with a million dollars. Consumers also have been advised Student-loan debt now eclipses credit Consumers also have been advised Student-loan debt now eclipses cred that anytime they come by extra cash, card debt.“As the price of education that anytime they come by extra cash, card debt.“As the price of education such as a bonus, they should use it all has risen and wages have stagnated, such as a bonus, they should use it all has risen and wages have stagnated, Groupthat at any to pay down credit card debt. Gottlieb The it’s noClearwater longer a no-brainer to pay down credit card debt. Gottlieb it’s no longer a no-brainer that any Morgan Stanley Smith Barney says to use some or most of it to chip educational debt is good debt,” Thakor says to use some or most of it to chip educational debt is good debt,”Thako away at your balance, but to keep the says.“In the current environment, it is away at your balance, but to keep the says.“In the current environment, it i 518 Diagonal Street rest “just for the sake of having cash essential to step back and think straterest “just for the sake of having cash essential to step back and think strat Clarkston, WA 99403 again and paying for things in cash gically about how much you are payagain and paying for things in cash gically about how much you are pay 509-295-5175 instead of feeling broke all the time ing for an education relative to the instead of feeling broke all the time ing for an education relative to the www.fa.smithbarney.com/clearwatergroup and charging things.” earnings you expect as a result. When and charging things.” earnings you expect as a result. Whe Beef up your emergency funds, too. the return on investment isn’t as high Beef up your emergency funds, too. the return on investment isn’t as hig Having the equivalent of three to six as you’d like, it’s time to think creHaving the equivalent of three to six as you’d like, it’s time to think cremonths’ salary or living expenses set atively. That may mean living at home months’ salary or living expenses set atively. That may mean living at home aside is still the recommended miniwhile going to school or taking a year aside is still the recommended miniwhile going to school or taking a yea mum, Potts says, but high unemployor two off before even starting school mum, Potts says, but high unemployor two off before even starting schoo Left to Right: Craig Conklin, Advisor, Timothy Lynch, ment rates and the Financial struggling econotoFinancial live atAdvisor, home, work and save. Or, ment rates and the struggling econoto live at home, work and save. Or, Kenneth Maestas, Financial Advisor, Eric Justis, Financial Advisor, Peggy Byers, Client Service Associate my suggest six to 12 months’ worth my suggest six to 12 months’ worth start at a community college and then start at a community college and the might be more prudent. might be more prudent. toindividual a statecircumstances school. and objectives. transfer to a state school. The appropriateness of a particular investment or strategy will dependtransfer on an investor’s InStanley addition to an emergency Inwasaddition an emergency point Advisors is to view education point is to Morgan Smith Barney LLC, its affiliates and Morgan Stanley Smith“The Barney Financial do not provide tax or legalas advice. This material not intendedto or written to be used for the purpose of avoiding“The tax penalties that may be view education a imposed on the taxpayer. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. reserve fund, have a “put-and-take” sav- any other valuable asset and make reserve fund, have a “put-and-take” sav- any other valuable asset and make Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, not a bank. Where appropriate, Morgan Stanley Smith Barney has entered into arrangements with banks and other third parties to assist in offering certain banking related ings account for unexpected day-toingsBank, account for affiliates. unexpected sure bythe return up-front sure Morgan the return justifies the up-front products and services. Banking and credit products and services are provided Morgan Stanleyjustifies Private Bank,the National Association, Morgan Stanley N.A. or other Investment day-toservices are offered through Stanley Smith Barney, LLC, member SIPC. specifically disclosed in writing, investments and services offered trough Morgan Stanley Smith Barney are day not insured by the FDIC, are home not deposits or other obligations of, or investment.” guaranteed by, the Bank and day expenses likeUnless home appliance investment.” expenses like appliance involve investment risks, including possible loss of principal amount invested. repairs or occasional splurges, Potts repairs or occasional splurges, Potts © ctW Features © ctW Features © 2012 Morgan Stanley Smith Barney LLC. Member SIPC. NY CS 7028076 01/12


16 | JANUARY 21, 2012

Saving for retirement: The Timeline How to think smarter and plan better for retirement at every stage of life | by Taniesha robinson Funding retirement is easy. Just ask planner David Schaeffer. “Make all you possibly Funding retirement is easy. Justcan. askSave all you possibly can.” And, start early. Often, the planner David Schaeffer.“Make allpeople you asking him for help on the eve of retirement didn’t screw up their investpossibly can. Save all you possibly ments. “It’s not that they did something wrong. It’s that can.” And, start early. Often, the people they never did something,” says the Schaeffer, , a retireasking him for help on the eve of ment planner with Futurity First Insurance Group in retirement didn’t screw up their Phoenix. There’s something for folks at every age to learn investments.“It’s not that they did about saving and investing for retirement. Start here. something wrong. It’s that they never did something,” says the Schaeffer, , a In your 20s retirement planner with Futurity First Saving for retirement isn’tThere’s a hot topic among 20Insurance Group insavings Phoenix. somethings. youngatpeople something But for folks everydevelop age to financial habits and make lifesaving decisions that can havefor lifelong consequenclearn about and investing es. retirement. Start here. In your 20s

Saving for retirement savings isn’t a hot topic among 20-somethings. But young people develop financial habits and make life decisions that can have lifelong consequences. “The kind of job you get when you’re young, in your 20s, can have a big impact on your lifetime security,” says Anna Rappaport, a consultant for events the Women’s Institute a Secure Have recent market left youforuncertain Retirement, Washington D.C.“A teacher or a policeman gets into a public penabout financial future? shouldn’t sion plan. That’s ayour lot different from getting into anInvesting occupation where there’s likely to not be much benefit.” be fraught with confusion; I can help clear things Today, expected retirement income from pensions or 401(k) accounts must be coupled disciplined lifelong personal savings, says and Bonnielong-term Sewell, prinup. with I will address your short-term cipal financial planner at American Capital Planning, Washington, D.C. “This is strategies,thehelp best easiestyou time inselect your lifethe to save if youinvestment don’t buy into an expensive lifestyle,” Sewell says. “Regardless your age, your needs and help guide ofyou Tip vehicles for your focus should be on disciplined saving and less on toward financial well-being. investments.” Start early. A It can be difficult for someone who just entered the 25-year-old who saves 15 percent labor force to think about saving for retirement. “If it feels a year is likely to better to call it ‘choices savings’ rather than retirement, do be able to afford that,” Sewell says. Early savings allows more “choices” later to retire at 62. “If on: career changes, marriage, divorce, health issues and you start later, more. you need to save more,” Rappaport The Schaumburg, Ill.-based Actuarial Foundation recsays. ommends people who begin saving in their 20s to put away about 10 percent of their income, a common rule

OKAY NOW WHAT?

Call today for more information or to schedule a consultation.

“The kind of job you get when you’re young, in your 20s, can have a big impact your lifetime says every job,oncareer changessecurity,” are fine,” Anna Rappaport,Rappaport a consultantsays. for the Women’s Institute for a Secure Retirement, or a ThisWashington may be theD.C. time“Aa teacher young coupoliceman gets into public pension lot difpleawelcomes theirplan. firstThat’s child.aWhen ferent from getting into antake occupation women a breakwhere from there’s work likely for to not be much benefit.” childbirth and child-rearing they lose Today, expected retirementincome incomeand fromalso pensions immediate loweror 401(k) accounts must coupledearnings, with disciplined lifelong their be lifetime reducing personal savings, retirement says Bonnie benefits. Sewell, principal Sewell financial says the planner at American D.C. wifeCapital shouldPlanning, proposeWashington, that half her hus“This is the easiest time in your life to save if you don’t band’s savings during that time fund buy into an expensive lifestyle,” Sewell says. “Regardless of the retirement accounts. your age, your focus Continue should be on disciplined saving and to save in a disciplined less on investments.” fashion, even if investments are growing steadily. Back in the day, an Tip investor could simply pick a Because women tend to live longer, sound allocation they needAdvisor, to save LPL Financial ofFinancial funds within a more 401(k) and 230 Johnson Ave., aggressively. Orofino, ID 83544 “everything would be fine,” (208) 476-7100 Schaeffer says. This is backed by other financial advisers. If toll-free (877) 476-7101no longer true. they are able, Sewell and Schaeffer Individuals who begin their retireteri@camasfs.com recommend those in their 20s save ment savings in their 30s should save up to 20 percent of income, which around 13 percent of their income, they say is ideal. according to The Actuarial Foundation. www. camasfs.com

Teri Bolling

In your 30s

www.disciplinediq.com

This is the time to eliminate debt and In your 40s be smart about a home purchase. “You should be approaching peak “Hopefully, college debt is behind earning years," Schaeffer says.“College them and the only loans in place are may be competing with retirement well-managed, auto- and housing-relat- for your savings dollars. If your lifeed loans,” says Schaeffer. If your style will allow, save aggressively.” employer does not match a portion of Home and auto loans, bills and your contributions to a company retirement savings alone can cause 401(k) plan, Schaeffer says, it could be financial strain during this life stage. worth seeking out one who does. But the addition of college tuition Job changes and even career payments can make it unbearable, Indepence changes are common at Powered this stage.“Ifby even for families that have made all you enter a defined contribution plan the right financial steps thus far. and if youSecurities have good savings levels at According to a 2008 study from are offered through LPL Financial, member FINRA/SIPC.


JANUARY 21, 2012 | 17

enough are doomed to a spartan existence, unless they insist on living in a high-class area or continue to spend at a level that is unsustainable,” Sewell says. She suggests taking on an extra job – part-time may be enough – and perhaps creating a stream of income on the side from selling something you make or pro-

viding a service, from building websites to de-cluttering homes. Retirees can expect to spend 4 percent of retirement assets annually to stretch savings over their remaining years, Schaeffer says. More than that is a problem. © CTW Features

the National Center on Higher Education and To determine Public Policy, colwhether you’re on lege costs are track in your savings try the AOL’s roughly a third of "Am I Saving the median famiEnough? What ly income for View Mountain Can I Change?" Funeral Home & lower-middlecalculator at Crematory class Americans. calculators.aol. Lewis Clark com/tools/aol/ The Actuarial Memorial Gardens retire02a/tool.fcs Foundation advises parents to ask children to help pay for their education with earnings from summer and part-time jobs, scholarships and loans. “If you make bad decisions on cars and mortgages and college, you’ve shot yourself in the foot,” says financial planner Sewell. The Actuarial Foundation recommends those who begin saving in their 40s to put away 20 percent of income.

to retirement savings now, if necessary. Resist any permanent withdrawal of retirement funds, especially before age 59.5, when early-withdrawal penalties disappear. Most account withdrawals will be taxed. Individuals who’ve just begun their retirement savings during this Merchant Funeral Home 40 perlife stage need to save around Richardson Brown cent of their income, according to the Actuarial Foundation.Funeral Home

Pre-planning is a SIMPLE process with GUARANTEED benefits for your family. Tip

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Full Social Security benefits kick in at this time, but it’s not going to be the reward that past generations saw. If retirement savings have been lackluster over the years, there are some rescue options.“There’s no reason that people who haven’t saved enough are doomed to a spartan existence, unless they insist on living in a high-class area or continue to spend at a level that is unsustainable,” Sewell says. Tip She suggests taking on an Sell assets that are not producing extra job – partmuch income or time may be growth, such as enough – and undeveloped land perhaps creating or a vacation a stream of home, and invest in income-producincome on the ing assets. side from selling something you make or providing a service, from building websites to de-cluttering homes. Retirees can expect to spend 4 percent of retirement assets annually to stretch savings over their remaining years, Schaeffer says. More than (509) that is a problem.

Start the New Year Out Fresh! Call Peggy for a tour and availability of apartments.

In your 50s

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years," Schaeffer says. “College may be competing with retirement for your savings dollars. If your lifestyle will allow, save aggressively.” Home and auto loans, bills and retirement savings alone can cause financial strain during this life stage. But the addition of college tuition payments can make it unbearable, even for families that have to retirement savings now, if necesmade all the right financial steps thus far. sary. Resist any According to apermanent 2008 study withdrawal from the of retirement especially before National Centerfunds, on Higher Education and age 59.5, when early-withdrawal Public Policy, college costs are roughlypena altiesofdisappear. account third the medianMost family incomewithfor drawals will be taxed. lower-middle-class Americans. The Individuals who’ve justparents begunto ask Actuarial Foundation advises their retirement savings during this children to help pay for their education life stage need to save around 40 perwith earnings from summer and part-time cent of their income, according to the jobs, scholarships and loans. Actuarial Foundation. “If you make bad decisions on cars and mortgages and college, you’ve shot yourself ATthe Age 65says financial planner Sewell. in foot,” FullThe Social Security benefitsrecommends kick in at Actuarial Foundation this time, but it’s not in going those who begin saving theirto 40sbetothe put reward that past saw. If away 20 percent of generations income. retirement savings have been lacklusIn teryour over the 50syears, there are some resIt’s cuetime options. to sock “There’s away every no nickel. reason Ideally, that for people saverswho of this haven’t age, mortgage saved enough costs are should doomed be in to the a spartan range ofexistence, 10 percentunless of income, they insist Schaeffer on living says, in anda high-class auto costs should area orbecontinue low. “College to spend costs at areabehind level you and you are in the 20-year that is unsustainhome stretch to retirement,” he able,” says.Sewell says. Tip Make “catchup” contributions She suggests to retirement now, if necessary. taking on Resist an any Sell savings assets that are not producing permanent withdrawal of extra retirement job – partfunds, much income especially beforeorage 59.5, time when mayearlybe growth, such as withdrawal penalties disappear. enoughMost – and undeveloped land account withdrawals willperhaps be taxed.creating or a vacation Individuals who’ve just a stream begun of their home, and invest in income-producretirement savings during income this lifeon stage the ing to assets. need save around 40 side percent from of their selling something income, according to the Actuarial you make or providFoundation. ing a service, from building websites to de-cluttering homes. At age 65 Retirees can spend Full Social Securityexpect benefitstokick in at4this percent of retirement assets annually time, but it’s not going to be the reward to stretch savings over their remain-savthat past generations saw. If retirement ings ing have years,been Schaeffer lackluster says. over More the years, than there that is areasome problem. rescue options. “There’s no reason that people © CTW who Features haven’t saved

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It can be difficult for someone who just entered the labor force to think about saving for retirement. “If it feels better to call it ‘choices savings’ rather than retirement, do that,” Sewell says. Early savings allows more “choices” later on: career changes, marriage, divorce, health issues and more. The Schaumburg, Ill.-based Actuarial Foundation recommends people who begin saving in their 20sthe to National put away about 10Tip percent of their income, a common rule Center on Higher backed by other financial advisers. If they Education and To determine arewhether able, Sewell Publicrecommend Policy, colyou’reand on Schaeffer those in their 20s save up to costs 20 percent lege are of track in your savings trywhich the AOL’s income, they sayroughly is ideal. a third of "Am I Saving the median famiEnough? What InCan your 30s ly income for I Change?" This is the time lower-middledebt and be calculator at to eliminate smart about a home purchase. class Americans. “Hopefully, calculators.aol. com/tools/aol/ college debt is behind them The Actuarial and the only retire02a/tool.fcs loans in place are well-managed, Foundation auto- and housing-related loans,” advises says Schaeffer. parents If your employer does nottomatch ask children a portion of your contributions to a to company help pay 401(k) for plan, their Schaeffer education says, with it could earnings be worth from summerout and seeking onepart-time who does.jobs, scholarships and loans. Job changes and even career changes “If you make decisions on cars are common at thisbad stage. “If you enter a and mortgages and college, you’ve defined contribution plan and if you have shot savings yourselflevels in the foot,”job, sayscareer finangood at every cial planner Sewell. changes are fine,” Rappaport says. The Actuarial This may be theFoundation time a youngrecomcouple mends those who beginWhen saving in welcomes their first child. women their 40s to put away 20 percent take a break from work for childbirth of and income. child-rearing they lose immediate income and also lower their lifetime earnings, reducing In your retirement 50s benefits. Sewell says the It’s wife timeshould to sock propose away that every halfnickel. her husband’s during the Ideally,savings for savers ofthat thistime age,fund mortgage retirement accounts. costs should be in the range of 10 Continue to save inpercent a disciplined of fashion, even if investmentsincome, are growing steadily.Tip Back in the day, an investor could simSchaeffer says, ply pick a sound allocation of funds within and auto costs Learn what your a estimated 401(k) andsocial “everything wouldbe be low. fine,” should security benefit Schaeffer says. This is no “College longer true. costs will be at retireIndividuals who begin aretheir behind retirement you ment by using the savings in their 30s should andsave youaround are in 13 retirement estimapercent according 20-yeartohome The tor at of their income,the Actuarial Foundation. stretch to retirewww.ssa.gov/ estimator or call ment,” he says. In800.772.1213. your 40s Make “catch“You should be approaching up” contributions peak earning

It’s time to sock away every nickel. Ideally, for savers of this age, mortgage costs should be in the range of 10 percent of income, Tip Schaeffer says, and auto costs Learn what your should be low. estimated social security benefit “College costs will be at retireare behind you ment by using the and you are in retirement estimathe 20-year home tor at stretch to retirewww.ssa.gov/ estimator or call ment,” he says. 800.772.1213. Make “catchup” contributions © CTW Features WA 1215 Evergreen Court, Clarkston,

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20 | JANUARY 21, 2012

As for for Mom Fido As and Dad… Fluffy… and

Pets are full-fledged members of many families

What to look forthese in andays, assisted – and, more often part ofliving mom and facility | Metro dad’s estate plan | by Lindsey Romain

Pets in the family financial plan? It’s not as far-fetched as it sounds. Asfor men and animals women enter their golden More pet owners are seeking ways to care their should they die years, many decide they can no longer unexpectedly before their pet. their and choose to downSensational celebrity pet tales are one maintain reason for thehomes uptick; Leona Helmsly, grade tonotoriously something smaller, it an apartthe controversial New York real estate investor, left $12bemillion to ment orofa condominium. her dog, Trouble, in 2007.“There were a couple big, notorious cases, with For millions of others, plays a people leaving millions of dollars to their pets,” says Danny Meek,health a financial role when whereincorto consultant who runs Pet Trust Law Blog, asignificant website that helpsdeciding pet owners movetook whennotice it’s time tothought, sell their ‘Maybe homes. porate pets into estate planning.“The public and According to the AARP, slightly more this is something I can do for my pet.’” than 5 percentcare of people 65 years and in The instinct to plan for Fido’s or Fluffy’s extended parallels the rise reside inInnursing congregate the notion that pets are full-fledged familyolder members. a May homes, 2011 survey of assisted living, and board-and-care 1,500 pet owners by PetMD, the majoritycare, of respondents (73 percent) said if homes. Though nodogs one plans live in a they could only have one friend, they would choose their over to a human. nursing home, seniors and their families More than 8 in 10 surveyed by dog-treat company Milo’s Kitchen said dogs are should at leastsaid know what look for just an equal member of their families. Fifty-eight percent they aretocomfortable case. referencing their dogs, and 35 calling themselves “mommy” and “daddy”in when Determine individual needs: Men and percent refer to their dog as “son” or “daughter.” women researching faciliBy 2013, the American Pet Products Association predictspotential that the living pet insurties might find it difficult to determine ance market will reach $400 million. “As people grow older, they lose their famtheir specific needs. Unforeseen health conditions, for instance, might dictate which option is the best fit. Men and women who have a medical condition that requires routine monitoring will almost certainly want a skilled nursing facility. But those without medical conditions who need help with simpler tasks of everyday life are likely to have those needs met by an intermediate facility. Some facilities provide both types of care, which can make transitioning from one to another much easier if or when that need arises. Facilities typically have intake planners on staff who evaluate each individual and determine which level of care is the best fit. Research policies and procedures: Each facility should be ready and willing to share and discuss its policies and procedures with regards to residents. What is the procedure when a resident has a medical emergency? What if a resident finds a living situation unpleasant? What is the facility’s philosophy regarding staff and resident interaction? What are the facility’s hiring practices, including certification requirements, for its personnel? What is the ratio of staff to residents? Each facility

should be ableMommy to answer theseand questions When promptly and adequately. Those who can’t Daddy Divorce should be checked off the list of residences to consider. The death of an owner isn’t theAARP, Facility ratings: According to the onlyresearch legal hurdle for pets. Divorce recent has shown that nonprofit also homes can make ugly. David nursing offerthings higher-quality care, Pisarra, a child ratios, custody lawyer better staff-resident and have fewer andviolations co-authorthan of “What About health facilities managed Wally? Co-Parenting Withand Your by for-profit companies. Men women Ex” (Libero Media, sugresearching facilities can2011), visit Caring.com , gests that pet owners divorce an online resource for men who and women should be mature andThe concise caring for aging relatives. website about pet parenting, enables adults to compareshould nursingboth homes owners choose to stay in the islife in their areas, including if a home for of the pet. profit or nonprofit, and the home’s capaci“In residents my experience, a thorty. U.S. can evenhaving learn each facilioughly drafted plan that you can ty’s Medicare ratings, which are detereach to reduces confusion mined byrefer examining the safety of the facilover who is responsible andand what ity and its overall quality of care a host you have agreed to,” Pisarra says. of other factors. “That takes away the friction of Get a firsthand account of the facility: miscommunication so you can just Before choosing a facility for themselves or relax and enjoy your pet’s love.” an elderly relative, individuals should He notes that courts are often spend some time at the facilities they’re reluctant to recognize pet-sharing considering to get a firsthand account of plans, which makes these selfwhat life at that facility is like. Observe the developed plans even more worthy. staff interactions with residents, including If a co-parenting arrangement if they address residents with respect and promises to be too stressful for a patience. How do the current residents high-strung pet, Pisarra says ownlook? Are they unkempt and left to their ers should try to recognize the ownharm devices, or do they and appear well it may cause work groomed and are they encouraged to intertogether to establish a different act plan. with other residents? Does the facility seem“There warm and or is it antiare welcoming, always situations septic? The move to an assisted facilwhere one parent needs toliving let go,” ity is often difficult and sometimes he says. “But even in those cases, depressing, so each the above conditions a parenting planofcan still allow for canoccasional carry significant weight when choosing visits and time-sharing. a facility. Dogs are generally more OK with Finding a nursing home a similar travel than cats, so theor type of pet facility for yourself or an aging relative is is also a factor.” not necessarily easy. Men and women fac© CTW Features ing such a difficult decision should begin the process as early as possible to ensure they find the facility that is the best fit.


JANUARY 21, 2012 | 21

Seniors and Fraud… Donating money to charity is one of the most selfless things a person can do. Unfortunately, criminals can easily prey on these selfless acts, using a person’s desire to help the less fortunate for their own personal gain. According to the Federal Bureau of Investigation, seniors should be especially mindful of fraud schemes. That’s because seniors are considered easy targets for criminals for a number of reasons. The FBI notes that seniors are most likely to have a nest egg and an exceptional credit rating, making them very attractive to criminals. What’s more, seniors are more likely to be ashamed if they feel they have been victimized and therefore are less prone to report the fraud. But seniors should know that con artists don’t discriminate when it comes to their victims, and people of all ages are victimized each and every year, particularly during the holiday season when men and women most commonly donate. Before donating to charity this year, older donors should take the following precautions to reduce their risk of being victimized by con artists posing as charities.

contributions. That’s because they don’t need to. A reputable charity can afford to keep its lights on and its programs running with or without your donation. If a caller or a letter is pressuring you to donate, don’t succumb to that pressure and kindly decline to donate. • Don’t let “gifts” pressure you. Another tool employed by con artists or even less reputable charities is to send “gifts” to prospective donors. These can include mailing labels or cards. The hope is that recipients will feel pressured into donating once they receive a gift. However, a charity that is worth a donation does not need to resort to such tactics, which are a waste of resources as well as a dishonest way to solicit donations. Seniors should not feel compelled to donate because they received free mailing labels. • Verify all information. Con artists are especially good at impersonating a reputable charity, sending emails with a well known charity’s logo but a link that directs donors to a different website entirely. Never make a donation without first verifying a charity’s information, including how your donation will be used and how much of the charity’s budget goes toward the services and programs it provides. Charity Navigator, a nonprofit organization dedicated to helping givers make smart donating decisions, recommends donors give to charities that direct at least 75 percent of their budget on programs and services related to their mission. To avoid donating to a fraudulent or unworthy charity, research the charity and make sure your money will be going where you intend it to go. • Save all records of donations. It’s important to save records of any donations for tax purposes, but it’s also important for seniors to keep records to avoid fraud. Many con artists prey on seniors by pretending to represent charities seniors have donated to in the past. By keeping records of all past donations, seniors can easily verify if they have donated to a specific charity in the past and whether or not the person on the phone or the author of an email or letter is telling the truth.

How to Build a College Fund

as For Fido and FluFFy…

Credit unions: Power to tHe PeoPle

on tHe way to a FinanCial Plan

Saving for college? Finding courage to take the first step may be the biggest hurdle

Credit unions are lowcost, low-profile alternatives to commercial banks and high banking fees 5 tiPs For Cutting deBt

Putting household finances on a firmer footing calls for deeper changes and fresh thinking

Pets are full-fledged members of many families and increasingly part of mom and dad’s estate plan

Odds are, you say you have one – but you don’t. Why your family needs a financial plan PoP Quiz: time to run tHe numBers

Increasing your financial security calls for clear thinking and focus.Take a minute and test your savvy

saving For retirement

How to think smarter and plan better for retirement at every stage of life saving and investing

Tough economic times left many families with a fearful question: Have the old rules of saving and investing changed forever? Beginner’s guide to Building a Budget

A budget is the foundation of a solid financial plan. Here’s a real-world guide to setting one up

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• Get off the phone. Seniors are commonly victimized by con artists over the phone. No reputable charity will want you to donate over the telephone. Instead, the charity will want you to familiarize yourself with their mission and history and then make a donation based on your research. If a caller wants you to donate over the phone, simply request they mail you information about the charity and then hang up. If they’re a reputable charity, this should not be a problem. If the caller continues to pressure you for a donation over the phone, just hang up. A caller soliciting a donation might be a con artist, an employee of a forprofit fundraiser or an employee of the charity itself. Ultimately, if you decide to make a donation, don’t do so over the phone. Instead, send that donation directly to the charity to ensure the charity receives the entire donation, instead of a portion going toward a fundraiser. • Don’t feel pressured. No reputable charity pressures prospective donors into making

Seniors are targets of charitable fraud | Metro


22 | JANUARY 21, 2012

Credit Unions: Power to the People Credit unions are low-cost, low-profile alternatives to commercial banks. As consumers balk at high banking fees, the low profile thing may be history | by Laura Drotleff movement hasare helped business,the Consumers rediscovering servicesconsumer offered byaccounts local credit saying typically unions, which are nonprofit, cost them more money thanmemberthey owned alternatives to banks that promake. And with new government vide all of the same services, accordregulations limiting surcharges, ing to Cheney. banks refocusing their sights on “By are moving to credit unions, consumers will save about $70 a year, on business. average,”short-term he says. Studies have shown Though effects may not people living paycheck to paycheck be significant, believe the than save even moresome at a credit union popularity credit unions the averageof customer becausewill they use more to credit union services. continue grow. “Last year, we theynew are credit member-owned, sawBecause 1 million union credit unions are able to offer better members. We will see more than rates and lower fees, virtually across that in 2012,” predicts CUNA the board, Cheney says. This includes President and rates CEOand Billlower Cheney. higher savings interest rates compared to banks, even Consumers are rediscovering thein this low-interest environment. services offered by local credit “It’s an entirely different philosounions, which are nonprofit, The nation’s nation’sbiggest biggestcommercial commercial banks received a clear message fall phy,” he says. “Banks use people to The banks received a clear message last last fall when member-owned alternatives when an estimated consumers make money; credit unions useto an estimated 650,000650,000 consumers withdrewwithdrew some $4.5some billion$4.5 and billion transferred money to help people. the funds to new accounts in the nation’s 7,200 credit unions. The problem: banks that provide all Credit of the unions same and transferred the funds to new accounts in the nation’s 7,200 credit truly are groups of people coming High fees for working-class account holders and small businesses and poor services, according to Cheney. unions. The problem: High fees for working-class account holders and together to help each other, versus customer service. The message: Enough is enough. “By moving to credit unions, consmall businesses and poor customer service. The message: Enough is doing business with banks, which The movement stemmed from already-rampant public distaste for the govwillanswer save about $70 a year, enough. bailout of large banks coupled with a social media call for a “National sumers ultimately to their shareholdernment on ers.”average,” he says. Studies have Bank Transfer Day” on Nov. 5, 2011. That Saturday alone brought 40,000 The movement stemmed from already-rampant public distaste for new the Small-business owner Matt D’Arcy, members and their $80 million to credit unions nationwide, according to the shown people living paycheck to government bailout of large banks coupled with a social media call for a financial planner who owns Credit Union National Association. paycheck save even more at a credit a “National Bank Transfer Day” on Nov. 5, 2011. That Saturday alone Greybridge Financial Group and is The Sept. 29 unveiling of Bank of America’s now-rescinded $5 monthly union than the average customer brought new the members and their $80occurred million throughout to credit unions debit card40,000 fee sparked mass exodus, which the vice president and co-owner of Hupp because they use Ohio, more says credit nationwide, according to thesurvey CreditofUnion National Association. month of October. In a CUNA 5,000 credit unions, a majority attribTax in Willowick, perhaps union services. uted their new membership growth that date to consumer $5 reaction to because of the nonprofit status of The Sept. 29 unveiling of Bank ofsince America’s now-rescinded monthly newly imposed bank feesthe and the Bank Transfer Day idea. Since then, the idea credit unions, theirmember-owned, management they are debit card fee sparked mass exodus, which occurred throughout the Because has grown. Some 61,000 people have liked the cause on Facebook, where the credit often has more longevity, unions are able toallowing offer month of October. In a CUNA survey of 5,000 credit unions, a majornew slogan is, “Every Day is Bank Transfer Day.” them to develop rapport with membetter ityWhile attributed new membership growth that and datebegan to consumer credittheir unions enjoyed the influx of newsince business lobbybers. rates and lower fees, virtually“When across Ithe says.as reaction newlytoimposed bank fees and thebig Bank Transfer Daymoveidea. ing for thetoability make more business loans, banks claim the dealboard, with aCheney bank – and, ment has helped business, saying consumer accounts typically cost them a small-business owner, I deal them a This includes higher savings rates Since then, the idea has grown. Some 61,000 people have liked the more money than they make. And with new government regulations limiting lot – there seems to be a revolving cause on Facebook, where the new slogan is, “Every Day is Bank Trans- and lower interest rates compared surcharges, banks are refocusing their sights on business. door for management types,” D’Arcy to banks, even in this low-interest ferThough Day.” short-term effects may not be significant, some believe the popusays. “With a credit union, you may environment. Whileofcredit enjoyed the influx of“Last newyear, business and1 began larity credit unions unions will continue to grow. we saw millionlobnew encounter the same manager for 30 “It’s anand entirely different philosocredit Wemake will see more than that in 2012,” predicts CUNA years, you can really develop a bying union for themembers. ability to more business loans, big banks claim the President and CEO Bill Cheney. time-trusted relationship and know phy,” he says. “Banks use people

to make credit unions that theymoney; will go to bat for you.” Whereas anyone can walk into any use money to help people. Credit bank and open an account, credit unions truly are groups of people unions are slightly different, with coming together to help each fields of membership eligibility. other, versus doing with Nearly everyone has business a credit union banks, which ultimately answer they can join, but they have to findto one they qualify to join first. For their shareholders.” example, Michigan State University Small-business owner Matt D’Arcy, Federal Credit Union (MSUFCU), abased financial planner who owns in East Lansing, Mich., is Greybridge Financial Groupinand owned by 162,000 members the State University and of isMichigan vice president and co-owner Oakland communities, Hupp TaxUniversity in Willowick, Ohio, says including students, alumni, faculty perhaps because of the nonprofit and employees, local schools and status of credit unions, their manbusinesses. Tucson Old City Pueblo agement ofteninhas moreAriz., longevity, Credit Union Tucson, is limited to city employees and select allowing them to develop rapport groups. with members. As a student at Michigan State “When I deal with a bank – and, as University, Michelle Gutierrez abelonged small-business owner, I deal them to MSUFCU. Now an alumin Kerrville, more anus lot living – there seems to Texas be a revolvthandoor 15 years later, she says types,” she has ing for management remained a credit union customer. D’Arcy says. “With a credit union, “We never changed,” Gutierrez you the same says.may “We encounter have just always made the manager 30 years, and youlocal can consciousfor decision to go with federaldevelop credit unions first. Theyrelahave really a time-trusted always had members in mind.” tionship andtheir know that they will © CTW Features go to bat for you.”

Learn more about… Joining a credit union at asmarterchoice.org Comparing credit union rates versus bank rates at ncua.gov (look under Resources and Information) Making smart financial decisions at mycreditunion.gov © CTW Features


JANUARY 21, 2012 | 23

Whereas anyone can walk into any bank and open an account, credit unions are slightly different, with fields of membership eligibility. Nearly everyone has a credit union they can join, but they have to find one they qualify to join first. For example, Michigan State University Federal Credit Union (MSUFCU), based in East Lansing, Mich., is owned by 162,000 members in the Michigan State University and Oakland University communities, including students, alumni, faculty and employees, local schools and businesses. Tucson Old City Pueblo Credit Union in Tucson, Ariz., is limited to city employees

and select groups. As a student at Michigan State University, Michelle Gutierrez belonged to MSUFCU. Now an alumnus living in Kerrville, Texas more than 15 years later, she says she has remained a credit union customer. “We never changed,” Gutierrez says. “We have just always made the conscious decision to go with local federal credit unions first. They have always had their members in mind.” © CTW Features

Sʑ®ƒ½ S›‘çÙ®ãù and Your

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Life Planning How to Build a College Fund

Resource Directory as For Fido and FluFFy…

Saving for college? FindPets are full-fledged Attorney-at-Law ing courage to take the Aherin, members of many famiRice & Anegon first step may be the biglies and increasingly part 1212 Idaho Street gest hurdle of mom and dad’s estate Lewiston, ID 83501 plan

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How to think smarter and plan better for retirement at every stage of life

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Beginner’s guide to Building a Budget

A budget is the foundation of a solid financial plan. Here’s a real-world guide to setting one up

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Hospitals Garfield County Hospital District 66 North 6th Street Pomeroy, WA 99347 (509) 843-1591 “Caring for generations.”

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YOU’VE SPENT A LIFETIME PREPARING FOR RETIREMENT.

NOW WHAT? If you’re recently retired or planning to retire, you’re probably concerned about making the right nancial decisions. Together, we can nd the answers. We’ll sit down, face to face, to develop a strategy designed to help your nances meet your needs over the long haul.

Dean E. Roy, AAMS Financial Advisor 1024 16th Avenue Lewiston, ID 83501 (208) 798-4742 1-877-798-4770

Brad Melton, AAMS Financial Advisor 1702 G Street Lewiston, ID 83501 (208) 746-1114 1-888-746-1123

Scott Arnone

Financial Advisor 1455 G Street Lewiston, ID 83501 (208) 746-2308 1-800-441-2308

Jim Kubiak

Financial Advisor 1366 Bridge Street Clarkston, WA 99403 (509) 758-8353 1-800-787-8353

Matt Sartini

Sherrie Beckman, AAMS

Larry Kopczynski

Stephanie Johnson

Financial Advisor 106 Michigan Avenue Orofino, ID 83544 (208) 476-3271 1-866-904-3271

Christian Leer, AAMS Brian Bailey, AAMS Financial Advisor 740 5th Street Clarkston, WA 99403 (509) 751-1610 1-877-751-1610

Financial Advisor 303 Bridge Street, Ste.3 Clarkston, WA 99403 (509) 758-8731 1-866-758-9595

Financial Advisor 2501 17th Street Lewiston, ID 83501 (208) 798-4732 1-866-798-4732

Financial Advisor 940 Bryden Avenue Lewiston, ID 83501 (208) 746-3875 1-800-646-8316

Financial Advisor 2501 17th Street Lewiston, ID 83501 (208) 798-4732 1-866-798-4732

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To learn how to make the most of your retirement strategy, call today.

www.edwardjones.com Member SIPC


Life Planning, 2012