Monday, December 29, 2014

Paragon Perspectives


This quarter's edition of Paragon Perspectives discusses mistakes to avoid in your Individual Retirement Account and some simple steps for late contributions.
Individual Retirement accounts (IRAs) have been great savings devices for many individuals.  Contributions have been limited to several thousands of dollars per year; however, rollovers of corporate retirement plans into self-directed IRAs have resulted in significant dollar values in many IRAs.  Because many individuals have significant amounts in IRAs, we discuss some of the planning issues involved with IRAs in this quarter’s issue of the Paragon Perspectives Newsletter.
Please contact us if you have questions about your IRA or company retirement plan, the asset allocation therein, and required minimum distribution.

Sincerely,
Wm. Jene Tebeaux CFP® CFA® CAIA®


If you did not receive a copy of this quarter's newsletter please email
info@paragon-adv.com to request a copy. 

Monday, December 15, 2014

Spending (Time) in Retirement


The December 1, 2014 Wall Street Journal (Encore Section, pg R3) had an interesting article about how people spend time in retirement. The implication was that time spent in retirement was different than time spent when working. That time utilization difference in retirement is intuitively obvious. What is not so obvious, however, is the financial impact of the time difference.
When we do a retirement plan, we assume that the individual/family spending needs will increase on an inflation adjusted basis until the end of the projection period. We do that knowing that, at some point, spending will start to decrease (barring catastrophic medical needs) as people age. The ability or desire to engage in expensive activities tends to decrease. Projections in such a plan are basically over estimating expenses and trying to match income to those expenses. This conservative planning is trying to ensure running out of “time” before running out of “money.”
The Journal article (from the Bureau of Labor Statistics data “How Retirees Spend Their Time: Helping Clients Set Realistic Income Goals,” Charlene M. Kalenkoski and Eakamon Oumtrakool) showed the following data: (Note-The original data measured weekday activities in average minutes per day for full time workers vs. retirees. We have converted the differences to a percent using the full time worker number as the base; thus a “+” percent means more time spent by the retiree than the full time worker in that activity).

Full Time Worker                                                                            Retiree
Sleeping                                                                                           +13%
Television/Movies                                                                         +130%
Socializing/Communicating with others                                   +42%
Reading for Personal Interest                                                     +269%

The study also found that retirees spent increased time in activities that were not exceedingly expensive (lawn/garden care, house cleaning, eating out less and preparing more meals at home).  In essence, although time spent may change dramatically in retirement, the change may not necessarily be significantly more expensive—especially as one ages.
We, at Paragon Financial Advisors, help our clients analyze the financial impact of retirement decisions; we’ll leave the time utilization to their desires. Paragon Financial Advisors is a fee-only registered investment advisory company located in College Station, Texas. We offer financial planning and investment management.


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