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Goal Setting Makes it Happen

My nephew and his fiancé plan to marry in April. Her mother and my brother are paying 50/50 for everything, including the honeymoon. Both had established similar saving objectives when their kids were young: a 529 College Savings Plan and a “Save for the Day” wedding plan. Luckily, they anticipated needing more savings than originally planned.

Using a mix of individual stock, stock mutual funds, CDs and bonds, their long-term goals afforded them the opportunity to earn a rate of return to outpace inflation – about 3 percent per year – and allow the investments to grow over time. Did they take more risk?

The general rule is the more time you have, the more investment risk you can afford to take; you can ride out the downturns and potentially turn short-term losses into future gains. Knowing how to create a successful strategy to meet your financial goals, in the time frame you need, is the place to start.

1.) Identify and prioritize your short-, medium- and long-term financial goals

2.) Estimate how much each of your goals will likely cost and add 10 percent

3.) Set up separate savings or investment accounts for each of your major goals

4.) Choose investments suited to meeting each of your goals based on your time horizon and risk tolerance (Source:

It’s OK if your goals change

Life happens. And when it does, it may/must change your goals. However, establishing small reasonable goals along the way can lead to accomplishing a larger goal. For example:

“In five years, I’ll need $3,000 toward my long-term (wedding) goal of $35,000.”

Shifting now to retirement, it is okay to change direction – how you’ll get there – and always keeping in mind the end goal: how you see yourself in retirement, how retirement will feel, what you want to do with your time, if you want to work at a side gig, and what steps you’ll take to ensure you will fulfill those goals.

  • Short-term goals are less than three years. You’ll want to keep these assets risk-free
  • Mid-term goals are three to 10 years. You’ll want to protect and grow these assets
  • Long-term goals are more than 10 years. You’ll want safety and preservation of capital

Developing a retirement transition fund

Delaying retirement for a few years is a reasonable goal. Your strategy might be to work for as long as you can even if not at your current job. When creating goals, remember that circumstances – not choices – will make or break your plan. The “right” transition into retirement – whether full retirement or part-time – will depend on your chosen goals and circumstances.

The Stanford Center on Longevity, in collaboration with the Society of Actuaries, has analyzed the feasibility of a straightforward retirement income strategy that can serve as a framework for deciding when to retire and how to deploy savings in retirement. Called the Spend Safely in Retirement Strategy (SSiRS), it consists of optimizing Social Security benefits and using IRS requirement minimum distribution to generate periodic retirement income, coupled with a low-cost stock index, balanced or target-date fund.

Workers who are approaching retirement can set aside a portion of their retirement savings to begin building a transition fund within their IRA or 401(k) plans, enabling them to delay drawing down their resources for as long as possible.

The retirement transition fund replaces the Social Security benefit that could have started at the time of retirement. The rationale is that if the retiree hadn’t decided to delay Social Security, he or she would have been satisfied with the Social Security benefit at retirement. In this case, the retiree will realize an increase in retirement income when the actual Social Security benefit starts that reflects the delayed retirement credits.

So in the period leading up to full retirement, the individual has a resource to draw from if laid off or can’t find work. In addition, it can provide a buffer against significant stock market declines during this time to prevent retirees from having to withdraw from long-term savings while asset values are depressed. Talk with your Hefren-Tillotson advisor for more information and if this strategy fits well with your situation.

This is the time for goal setting

Soon, 2019 will be a memory. We, at Hefren-Tillotson, hope it has been a good year for you and your family. There is so much to be thankful for this holiday season and so much to look forward to in 2020. Knowing the new tax rate schedules will help you get started. Here is a sample for married individuals filing joint returns and surviving spouses:

If taxable income is: The tax is:
Not over $19,750 10% of taxable income
Over $19,750 – to $80,250 $1,975 plus 12% of the excess over $19,750
Over $80,250 – to $171,050 $9,235 plus 22% of the excess over $80,250
Over $171,050 – to $326,600 $29,211 plus 24% of the excess over $171,050
Over $326,600 – to $414,700 $66,543 plus 32% of the excess over $326,600
Over $414,700 – to $622,050 $94,735 plus 35% of the excess over $414,700
Over $622,050 $167,307.50 plus 37% of the excess over $622,050

(Source: Thompson-Reuters)

Tally up what you’ve spent, on necessities, wants and needs, etc., and what you’ve saved. Are there “money wasted” expenditures or ones where you’ve clearly overspent? Like most of us, there are ways to cut back, and ways to increase your saving. Goal setting, what you want to accomplish in what time frame is all up to you. We wish you well.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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