5 Costly Mistakes of the Newly-Retired

Reaching retirement is only half the battle. Once you successfully retire, it is up to you to make sure your money lasts. Too many retirees make costly mistakes that can quickly deplete their savings and force them back into the working world.

If you want to stay retired, you need to avoid making these five mistakes.

Changing your lifestyle too quickly.

What’s on your retirement to-do list? Do you want to relocate? Purchase an RV? Travel the world? Unless you have specifically budgeted for these adventures, we’d advise you to stop and catch your breath. Waiting one year before making any major changes will give you time to adjust to your new life and avoid making a critical mistake.

Starting Social Security too early.

While you are eligible to start Social Security as early as age 62, that doesn’t mean it’s a good idea. The longer you wait to claim these benefits, the larger your paychecks will be. For example, waiting until age 66 will boost your monthly income by 25%. Waiting until age 70 adds another 32%.

Being too conservative with investments.

It’s commonly advised to shift to a more conservative investment approach as you near retirement. While this is generally good advice, it is important not to become too conservative; you still want to make your money work for you. With most bonds and CDs yielding 1% or less, retirees should keep a small portion of their money in the stock market.

Not planning for withdrawal taxes.

Every type of retirement account is different, especially when it comes to taxes. If you don’t account for this, you could end up losing more money than you need to, or worse, running out of money entirely. Your financial advisor can help you determine a withdrawal strategy that is best for you.

Failing to prepare an estate plan.

Many retirees have done a great job preparing for their own financial needs, but give little-to-no thought about what happens to their money after they pass away. Without a proper estate plan, you may not be able to transfer your wealth to your spouse or children. Click here to learn more about estate planning.

American Investment Planners, LLC offers professional financial advice to individuals across the country. Whether you need help planning to retire, staying retired, or crafting an estate plan, our consultants are here to help.

To schedule a face-to-face appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Top Sources of Retirement Income

Working Americans typically have one major source of income: their job. However, upon retirement, individuals may rely on several different sources of income to sustain their lifestyle. Here are seven different ways that current retirees are making their money:

1. Retirement accounts. A well-funded IRA or 401(k) account should make up a significant portion of your retirement fund. The earlier you open an account and start saving, the bigger your nest egg will be when it’s time to retire.

2. Social security. Social security is currently the largest source of retirement income, with more than 88% of retirees receiving steady payments. While baby boomers can rely on Social Security for now, funds may be depleted for future generations.

3. Pension. More than one-third of current retirees get a pension income, however this number is likely to drop in the future. Fewer companies are offering pension programs to new workers, and those who do are yielding smaller payouts.

4. Savings Accounts & CDs. Also known as “time deposits”, CDs require investors to deposit their money for a predetermined length of time while it earns interest. If you have the funds to spare, keeping some of your capital tied up in CDs is a good, safe way to earn additional money.

5. Home Equity. If you have a lot of equity built up in your home, you can use it to help fund your retirement by using a reverse mortgage or by downsizing and pocketing the extra cash.

6. Stocks & Annuities. According to U.S. News, only 20% of workers think stocks will provide a significant amount of their retirement income. Even fewer are utilizing annuities. Talk to your financial advisor about the benefits of these income sources.

7. Part-Time Work. Retiring from your career doesn’t necessarily mean you have to stop working altogether. Picking up a part-time job can give retirees a sense of fulfillment and an additional source of income.

If you are currently planning for retirement, you should be looking to utilize as many income sources as possible. Not sure where to begin? The financial advisors at American Investment Planners, LLC can help you craft a personalized, diversified retirement plan that meets your needs. To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Breaking Down the Three Major Stock Indexes

If you have ever read an investment article or tuned into a financial program on TV, chances are good you’ve already been exposed to some of the major stock indexes. While there are literally dozens of them, today we focus on three of the most prominent examples: the Dow Jones Industrial Average, the NASDAQ Stock Market Composite, and the S&P 500.

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA), often referred to simply as, “The Dow,” is one of the oldest and most well-known stock indexes in the world. It was invented by Charles Dow and Edward Jones back in 1896 to serve as a representation of the greater U.S. economy. When the index first launched, it included 12 companies, almost all of which were industrial.

Today, the DJIA includes stocks from 30 companies in all different sectors, which collectively make up about 25% of the total market. These companies are household names and leaders in their industry. Examples of companies included in the Dow are General Electric, IBM, and Coca-Cola. It is a price-weighted index, meaning stocks with higher share prices have a greater weight in the index.

While the Dow Jones has undergone many changes in its history, one thing remains the same: it is commonly used to interpret the American economy as a whole.

NASDAQ Stock Market Composite

The NASDAQ Stock Market Composite is comprised of more than 5,000 stocks listed on the Nasdaq stock exchange. Although it covers companies in many different industries, it is heavily weighted towards technology stocks, which make up more than 40% of its individual securities. Unlike the other stock indexes, the NASDAQ is not limited to U.S.-based companies.

According to Investopedia, the index is calculated continuously throughout the trading day, but it is reported once per second, with the final confirmed value being reported at 4:16 p.m. each trading day.

Standard & Poor’s 500

The S&P 500 is widely regarded as the most accurate gauge of the marketplace as a whole for two reasons. First, it is comprised of 500 widely-traded companies, compared to just 30 for the Dow. Collectively, these companies make up about 80% of the market’s total value. There is also a big difference in how individual companies are weighted within each index. The S&P 500 is market-weighted, whereas the Dow Jones is price-weighted. Even though the Dow Jones is more frequently talked about, the S&P 500 will paint a clearer picture of the American economy.

The Bottom Line

By keeping an eye on these indexes and tracking their movements over time, you will begin to get a general idea of the investing public’s attitude towards different companies and sectors. While these indexes are supposed to represent the market as a whole, it is important to remember that they are simply a tool – not the gospel.

If you want to learn more about index investing, speak with one of the financial advisors at American Investment Planners, LLC. To schedule a face-to-face appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

7 Essential Traits of a Good Investor

From the wealthiest of billionaires to the man celebrating his first day of retirement, successful investors are all around us. While they may appear in many different shapes and sizes, almost all of them share these seven common traits:

1. Patient. Patience is the number one characteristic of a good investor. Investing is a marathon, not a sprint, and you need to have a long-term mindset if you want to be successful.

2. Focused. A good investor is focused on his practice, and takes it one step at a time, one investment at a time.

3. Well-Informed. There is a wealth of information available on the subject of investing; use it to your advantage. A good investor is constantly brushing up their knowledge by reading the latest industry news and insights.

4. Cautious. The average investor sees a trend, and jumps in head first. A good investor is not so easily sold. They look deeper into the trend, find out why it is succeeding in the current market, and if this success is likely to continue.

5. Methodical. Every good investor has a different strategy, but every good investor has a strategy. You will be much more successful using a methodical approach than simply investing in whatever looks good at the time.

6. Disciplined. Once you have found a method that works for you, stick to it. Don’t let a few failures force you to abandon your strategy, and don’t let a few successes go to your head.

7. Resourceful. Good investors rarely do it alone. They know what resources exist that can be beneficial to them, and they use them to their full advantage.

Let American Investment Planners, LLC be your resource. Our financial advisors are ready to sit down and discuss your financial goals. To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Advantages and Disadvantages of Applying for a Tax Extension

Important reminder: Tax Day 2017 is Tuesday, April 18th. This is the last day individuals can submit their tax returns to the IRS, unless you file for an extension.

Tax extensions extend this deadline to October 16th, giving individuals an extra six months to prepare and submit their paperwork. While this sounds like a dream come true for busy families and procrastinators, it does have its drawbacks.

Let’s take a look at some of the pros and cons of filing for a tax extension:

Advantages of filing for a tax extension:

• It’s easy. Few things are easy when it comes to the IRS, but filing an extension is one of them. Just file before the deadline and fill out the form correctly, and they will be happy to grant you an extension – no questions asked.

• Avoid late fees. Submitting your taxes past the deadline (without filing for an extension) is a fineable offense, and could cost you 5% of your refund check each month you are late, with a cap of 25%. You worked hard for your money, don’t lose it because you didn’t file on time!

• Potentially save yourself an audit. If you rush to submit your taxes before the deadline, chances are greater you will make a mistake, resulting in a dreaded audit. Giving yourself more time to submit your taxes reduces your chances of a critical mistake, and thus reduces your chance of an audit.

• Cheaper preparation. Professional tax preparation services are at their busiest during March and April, and often charge a premium during these months. Not only will appointments be easier to make after the deadline, they might even be cheaper.

Disadvantages of filing for a tax extension:

• You don’t get an extension on taxes owed. Unfortunately, an extension on your paperwork is not an extension on your bill. If you owe money to the government, you must still pay it before the April 18th deadline.

• You delay your refund check. The longer you wait to file your return, the longer you wait for your refund check – it’s as simple as that.

• You are only prolonging the inevitable. Your taxes won’t be any easier six months from now. If you procrastinated this time around, chances are good the same will happen in October, only without the option of an extension to save you.

After weighing out the pros and cons, it makes sense for most people to file their taxes before the deadline, barring any extenuating circumstances. If you are stressing out about getting yours done on time, contact the tax professionals at American Investment Planners, LLC. We will have your return submitted before the deadline, and guarantee to get you the biggest refund possible.

To schedule an appointment with one of our professionals, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

5 Things to Consider Before Changing Jobs

The grass isn’t always greener on the other side.

When faced with the prospect of a potential career change, it may be tempting to make the switch, but first it is important to consider everything about the new job. Here are just a few factors to consider before accepting the offer.

1. Salary

Compensation is often the first thing we consider about a job, but it’s worth mentioning anyways. Will you be making more or less than your current job? If more, is it enough more to outweigh the potential extra work? If less, will you still be able to live your current lifestyle? How often does the company give raises? These are all questions you must ask yourself.

2. Benefits

Benefits, such as health insurance or retirement plans, are very important. Sometimes, an improvement in benefits can even make up for a small dip in salary. Benefits can also include vacation time, flexible working hours, extended maternity leave, or tuition reimbursement.

3. Opportunity for Advancement

Unless you want to be in your new role the rest of your life, you should consider the opportunity for advancement within the new company. How quickly you can climb the corporate latter can drastically impact the other points on this list, such as compensation and benefits.

4. Company Culture

When interviewing with the new company, what was the impression you got of its culture? Does it match your personality and preferences? Did you meet any of your potential coworkers, and what kind of vibes did you get from them? You will spend most of your waking hours in the office; you may as well like it.

5. Impact on Lifestyle

How will your new job impact your lifestyle outside of work? Will you have to work more hours or travel further to the new office, leaving less personal time in your life? You should also think about how the new position aligns with your out-of-office life and long-term goals.

A career change can instantly impact all matters of your personal finances. If you have recently switched jobs, or are considering switching jobs, consider talking to the professional financial advisors at American Investment Planners, LLC.

To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

How Do Target-Date Retirement Funds Work?

If you are saving for retirement (which you ought to be), you should be familiar with the term “Target-Date Funds”. If not, don’t worry. The financial professionals at American Investment Planners, LLC are here to tell you everything you need to know…

What is a target-date fund?

A target-date fund – also known as life-cycle fund or age-based fund – is a hybrid mutual fund that automatically reallocates its asset mix as the target date approaches.

How do target-date funds work?

When you open a target-date fund, you must designate your anticipated year of retirement: for example, 2020 or 2055. As time progresses and your retirement draws nearer, your portfolio manager will adjust the asset mix to reflect your changing needs.

For example, you are a young worker that plans to retire in 2050. The 2050 target-date fund will be heavily weighted towards stocks, with a small percentage of the portfolio dedicated to bonds and cash equivalents in order to maximize growth potential. As your retirement date approaches, a higher percentage of your asset mix will be shifted towards bonds and cash equivalents in order to reduce risk and volatility.

Do target-date funds have a place in my portfolio?

Target-date funds take the responsibility of rebalancing off the investor, which can be a double-edged sword. This hands-off approach is appealing to many, however others may not be satisfied with the management of their portfolio. For example, your portfolio manager may not readjust your asset mix frequently enough, or they may be too aggressive with their investments as you approach retirement. In the end, they are a good retirement planning tool, but results are far from guaranteed.

If you want to learn more about target-date funds, or retirement planning in general, our financial consultants are here to help. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

The 3 Golden Rules of Retiring Early

Retiring on time seems impossible in today’s world, but it is achievable. All it takes is a good plan and a disciplined approach. Follow these three golden rules from the pros at American Investment Planners, LLC and you will be on the fast track to retirement in no time…

Rule #1: Start early.

The earlier you start saving for retirement, the earlier you will reach your goal. Many people procrastinate opening their retirement accounts because they feel they don’t have enough money to make a significant impact. The truth is, the amount of capital you start with is not nearly as important as when you start. Take the scenario in this article, for example: Ashley is able to save more money than Bill, despite contributing less than half as much, because she started saving ten years earlier.

Rule #2: Take advantage of your 401(k) match.

A 401(k) is a special type of employer-sponsored retirement plan that is funded through pre-tax deductions from your paycheck. What makes the 401(k) so great is that many employers offer a company match: meaning they will match your contributions penny for penny, up to a certain percentage of your salary. At the very least, you should be contributing enough to your 401(k) to maximize your employer match – anything less is essentially giving up free money.

Rule #3: Maximize your contributions.

The IRS sets limits on how much money you can contribute to your retirement accounts annually. If you can afford to, max out these contributions each year. The more money you save now, the more money you will have later, and the difference is exponential. The current 2017 contribution limits are:

• Traditional and Roth IRA: $5,500 per year
• 401(k) and 403(b): $18,000 per year

Ready to start planning for retirement? Let us help. The financial advisors at American Investment Planners, LLC have been helping individuals plan and achieve their retirement goals for more than 30 years.

To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

9 Wise Ways to Spend Your Tax Refund

So, you followed our tax advice and were able to maximize your 2017 refund. You’re off to a good start, but what good is a big refund if you don’t spend it wisely?

While it may be tempting to take that refund check to the mall and spend it on a fancy new toy, you will thank yourself later if you exercise restraint and invest this money.

Here are nine smart ways you can spend your tax refund this year:

1. Re-invest the money in a retirement account. Roth IRAs allow your money to grow tax-free and have no minimum required distribution, making them a popular choice.

2. Pay off some credit card debt. Pay off your accounts with the highest interest rates first.

3. Make an extra payment on your mortgage. If you are lucky enough to have no high-interest debts, consider putting your money towards your mortgage.

4. Build your emergency fund. Your emergency fund should be able to support up to six months’ worth of living expenses.

5. Put it towards your next big purchase. Whether you have a new car or home improvement project on the horizon, your tax refund can be used to pay off a significant chunk of it.

6. Use it on your insurance policy. Upgrade your policy or just pay next month’s premium, the choice is yours!

7. Invest in your career with additional training or an industry conference. You are your own biggest source of income, so it makes sense to invest in yourself.

8. Make a charitable donation. Doing the right thing just feels good, plus it can reduce your taxable income for next year.

9. Treat yourself. There’s nothing wrong with spending part of your tax refund on yourself. The key word is part: try to limit this spending to 10% or less of your total refund.

Whether you are looking to maximize your tax return, or just need advice on spending it wisely, the financial consultants at American Investment Planners, LLC are here to help. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.