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Filled Under: Financial

Top retirement financial concern: Health care bills

People over 50 say their top retirement financial worry is health care costs, a survey, out Friday, shows.

But only 15% of pre-retirees have tried to figure out how much money they might need for health care and long-term care in retirement, according to the survey of 3,300 people, ages 25 and older, conducted by Merrill Lynch in partnership with Age Wave, a research think-tank on aging issues.

State program promotes financial literacy

SMYRNA – Stewarts Creek Middle served as the kickoff location for a new statewide program designed to help students learn more about money management before entering high school.

State Treasurer David Lillard Jr. visited Stewarts Creek Middle Friday morning to announce the launch of Vault, a web-based program developed by EverFi. The program helps students understand financial concepts such as credit, savings and banking and is now available to all Tennessee students in grades 3-8.

Lillard said the state has a goal of being among the most financially literate in the nation. Vault, he said, will help make that happen.

You can live fairly well on a good, modest income, but part of that comes from making good financial decisions, Lillard said. It starts with how you decide to plan for what you spend, what types of loans or credit cards you apply for.

Tabitha Herrin, who teaches teen-living at the school, said her class involves some sort of financial lessons each year.

By the time they leave here and go to high school, theyre exposed to a lot of whats taught in personal finance in high school, but they wont actually be able to earn that credit until after middle school, said Herrin. The good thing is that these concepts wont be foreign to them once they take that class, and theyll be that much more ahead.

Tennessee students who entered high school in the fall of 2009 or later are required to earn a half-credit in personal finance.

While working on the Vault (everfi.com/vault) site, sixth-grader Lexi Jones worked on a module about health care costs. She appreciated the lessons being presented in a way she could understand.

Its simple to learn, and it makes what could be boring fun, she said.

Additionally, Lillard announced that students who complete the two and one half-hour computer program would be eligible to enter a contest for a $5,290 deposit in their TN Stars college savings account.

The 529 education savings plan launched two years ago and now has more than 5,200 accounts valued at $20 million, said Blake Fontenay, communications director for the treasury department. Named after the section of the Internal Revenue Service code that governs such accounts, 529 funds are open to children or adults and can be used at any institution that accepts federal funds.

Full details of the program are available at tnstars.org.

Money earned on investments in TNStars is tax free, provided it is used for qualified higher education expenses, officials said. The program offers several different investment options, including an age-based option featuring more aggressive investments when children are younger. Investments become more conservative as they approach college age.

Contact Mealand Ragland-Hudgins at 615-278-5189 or mragland@dnj.com. Follow her on Twitter @dnj_mrhudgins.

Financial Advisors Are Worried About What ISIS Means For Their Clients’ Portfolios

REUTERS/Ahmed JadallahA Kurdish Peshmerga fighter holds a rocket-propelled grenade launcher as he takes up position in an area overlooking Baretle village (background), which is controlled by the Islamic State, in Khazir, on the edge of Mosul.

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.

Financial Advisors Are Making Changes To Clients Portfolios Because Of The Ongoing Geopolitical Volatility (Wealth Management.com)

The ongoing geopolitical risks are leading financial advisors to make changes to clients portfolios. Several advisors have repositioned their clients portfolios more conservatively over the last year, in anticipation of a correction. Additionally, advisors are limiting exposure to international markets.

The most threatening risk is ISIS, the extremist Sunni Islamic group attempting to establish a caliphate in the Middle East, according to Diana Britton.Advisors are worried that ISIS will cause disruptions in oil-rich areas, which will subsequently cause crude oil to spike where if it remains elevated for a significant amount of time could cause further drag on world economies.

If the Sunni/Shia wars in the Middle East result in a closure of the Strait of Hormuz, then around 17 percent of global energy production would be lost and prices would rise sharply, and the global economic recovery would be at risk, Tom Elliot, international investment strategist at deVere Group added.

Envestnet Just Hired The Ex-RIA President In Hopes Getting Closer To Advisory Firms (Financial Planning)

Envestnet picked up Jay Hummel, the former president and COO of RIA Lenox Wealth Management in Cincinnati. Hes coming on as a senior vice president of advisor relations.

Envestnet is a leader in turnkey platform services for advisors (including: client reporting, portfolio and data management, analytics, and back office service and administration).

Hummel has been charged with making sure the Chicago-based platform provider is giving advisors what they need, and working with advisors to optimally implement the services, according to Charles Paikert.

Jays expertise in running a large RIA will help us engage with advisors and serve high-net-worth clients in a more scaled, efficient way, says Envestnet president Bill Crager.

Low Average Credit Quality Allocation Funds Might Be Bringing In Junk Bonds(Morningstar)

Allocation funds are the workhorses in many investors portfolios, but with high-quality bond yields ultra low, some allocation funds have assumed an aggressive posture with the fixed-income component of their portfolios, according to Christine Benz. In fact, a small subset of allocation funds currently have durations longer than the Barclays Aggregate Bond Indexs, and a larger number have ventured down the credit-quality ladder.

The major worry about this is that if stocks happen to waver, numerous allocation portfolios with low credit qualities would be likely to fall further than their high-quality counterparts.

However, despite that, investors dont need to run away from allocation funds with low average credit qualities. That positioning has served many such funds well over the past five years, and in some cases over longer periods, too. Its also possible that these funds managers could lighten up on low-quality bonds at some point in the future, thereby, protecting their charges on the downside.

Look At ETFs Now That Emerging Markets Are Having A Moment Again(Blackrock Blog)

Investors are turning their attention back to emerging-markets equity, according to the latest research. In August alone, they gained $4.7 billion. Blackrocks Heidi Richardson is suggesting that investors look to exchanged traded funds (ETFs).

Actively managed funds seek to outperform a specific benchmark, and portfolio managers often have full discretion over how they attempt to do so. As such, many actively-managed funds aren’t all that precise in the exposure they provide. Today, seeking exposure to a specific emerging or frontier market, or to the broader emerging and developing universe, is easier to do than it would have been just a decade ago as the index-tracking ETF market continues to grow. What’s more, ETFs offer diversification and liquidity; they are also generally available at a lower cost than comparable actively managed funds.

This Family-Run Fun Has Been Nearly Doubling The Samp;P 500 Performance (Investment News)

The small Pennsylvania investment firm Biondo Group LLC is the top performer for long-short US equity mutual funds. It saw a 56% gain last year and 17% this year — so far. Both years are almost double the Samp;P 500s performance.

The Biondo Focus Fun holds just 15 to 20 positions at a time, and much of its success comes from more than tripling its money on Pacira Pharmaceuticals Inc. — whose stock has surged 1,400% since its 2011 IPO.

Money Matters: Pulaski Tech Dealing With Financial Aid Issues

LITTLE ROCK, AR – Every year around this time students on most college campuses are anxiously awaiting their financial aid refunds.

Im normally depending on it, you know I have a lot of extra bills I have to pay, says Kayron Strickland.

Kayron Strickland a Junior at Pulaski Technical College says she was expecting her financial aid to hit her account today, but it didnt due to a computer system failure.

We feel if they have a system issue to come and advise the students, says Strickland.

Lavonne Juhl, Financial Aid Director says it wasnt just Strickland but more than 700 students who did not receive aid.

We are still working with our software provider and with the US Department of Education to determine why they were not funded, says Juhl.

Other students say they were not granted their full subsidized loans as in past semesters students could get up to $9,000, however Pulaski Tech decided to only award $3,000 upfront.

Students wanting the additional funds must complete a request, the changes Juhl says were made to protect students.

Our cohort default rate for 2010 was 28 percent and we feel its very important that students are aware of student loan debt and how it can impact their future and as an institution, says Juhl.

Some students say they had no idea new policies were in place.

Im like wait wheres it at, you contact them, well we changed the policy well how come nobody was notified, says Tabitha Eldridge.

Through required reading and information provided on our student website and portal that information is disclosed to students, says Juhl.

However, Juhl says they are working to get students their refunds.

Kayron Strickland says she hopes its soon.

When youre depending on money, and they dont tell you something.

She says can cause a lot of frustration.

The incredibly high cost of Americans’ financial stupidity

We’ve all heard the saying, there’s a sucker born every minute.

Well, what if I were to tell you that this is a gross underestimate? According to the Department of Human Health and Services, there are about 7.6 Americans born every minute, and there’s good evidence that about five of them will grow up to be suckers when it comes to financial literacy.

The University of Michigan’s Health and Retirement Study found that only about one third of Americans ages 50 and older were able to correctly answer three simple questions about how compound interest works, what inflation means for one’s savings and investment gains, and the basic differences between a single stock and a mutual fund.

In the latest addition to a body of economic research that shows Americans’ striking financial illiteracy, a study by economists Benjamin Keys, Devin Pope, and Jaren Pope examined Americans’ refinancing habits during the worst of the financial crisis, when the Treasury Department and Federal Reserve were doing their utmost to get people to refinance their mortgages and take advantage of low interest rates. According to the paper:

We estimate that approximately 20% of households for whom refinancing would be optimal and who appeared unconstrained to do so, had not taken advantage of the lower rates. We estimate the present-discounted cost to the household who fails to refinance to be approximately $11,500, making this a particularly large consumer financial mistake.

Altogether, this failure to refinance cost these consumers, and presumably the economy at large, $5.4 billion. And this estimate is actually on the conservative side of the spectrum.

A 2008 study by Dartmouth finance professor Kenneth French estimated that investors in the US pay roughly $100 billion per year in fees and other expenses in an attempt to beat the market rather than investing in low-fee index funds that track the broader performance of the stock market. And a 2006 study from Harvard economist John Campbell estimated that poor decisions concerning mortgage financing costs homeowners more than $50 billion annually. The list goes on, from payday loans to credit cards to retirement products: Americans spend billions more because of their lack of financial knowledge.

Cass Sunstein, former Obama Administration official and promoter of government policies that nudge people into avoiding making such predictable and costly mistakes, suggests that we should institute rules that force banks to make it very easy to refinance loans when interest rates fall. While this approach won’t be very popular with banks or mortgage investors, there’s plenty of research that shows that creating systems where it’s easier to make the right choice about your finances will lead to more people making those choices.

This is also good way to approach the problem of the American retirement system, in which average citizens waste billions of dollars every year without making their futures more secure. Private companies have basically abandoned defined-benefit retirement programs, but that doesn’t mean they should abandon the idea that they are partly responsible for making their employees’ retirements as comfortable as possible. That means setting up automatic enrollment, automatic escalation of their contributions, and, most importantly, not giving the option to invest in high-fee funds. It also means that employers need to make sure that their employees have the knowledge to make the right choices.

At the end of the day, there also must be a greater emphasis placed on financial education in public school systems so that, at the very least, the vast majority of consumers can understand a concept like compound interest. There may very well be five suckers born every minute in this country, but there’s no reason they have to remain suckers for the rest of their lives.

Financial expert: Start holiday shopping now

Financial experts say thats a good thing.

While it might get on your nerves to hear Christmas music in September, money advisors say take advantage of it. Dont wait until Black Friday. Make your Christmas Wish list now. Financial planners say youll likely stick to a budget and not make last minute purchases.

The holiday shopping season is the most important season for retailers – making up about 20% of their yearly sales, so stores are eager to move the season earlier and earlier.

Its not a bad thing they start it earlier. If you start buying early, you can spread it out over paychecks. If you wait until the last week before Christmas, and you spend $20 bucks for a gift and put it on a high rate credit card, you end up paying $40 dollars for that gift, said Robert Baltzell, financial planner.

Before you head out to the stores, shop smart. Be a scrooge, the average shopper spends $130 on themselves when they are shopping for someone else. Plus there are perks for the early birds who plan ahead.

If you sign up for the twitter pages, emails, I know its a lot of emails and people dont like to put up with it, but if it saves you $20 bucks at your favorite retailer, there you go, said Baltzell.

Talk to your extended family now about making plans. Consider only buying gifts for kids or giving adults small gifts under $10 dollars.

Tips from RLB Financial:

1.  Set a Spending Limit

Before you hit your first store website- make a list of who you’re buying for and how much you plan to spend. I stress to my clients the importance of budgeting year-round, and holiday shopping is no exception. Keep that checklist with you as you shop to help avoid impulse buys. I have a great holiday budget worksheet to help you plan on my website, rlbfinancial.com.

2. Go for the Gift Card

You probably have people like teachers, babysitters, newspaper carriers and doormen on your list of who to buy for. You can save yourself a lot of guesswork by getting gift cards. Plus, it’s a great way to stick to a budget. But only buy gift cards from reputable retailers. Cards sold through online auction sites might be stolen or counterfeit.

3. Be Scrooge

Be Scrooge when it comes to shopping for yourself. It is so easy to impulse buy when you see something you like on sale, but this is one of the biggest budget-busters! The National Retail Federation says self-gifters will spend about $130! Stick to your spending limit and try to steer clear of temptation.

4. Avoid hidden Fees

The average person plans to do 40% of their shopping online (according to the NRF). When you’re using the Internet, you need to be especially careful, or you could end up paying for something you don’t want. These types of hidden fees can really add up, so make sure you read the fine print before agreeing to buy anything.

5. Win Loyalty Points

This will be an extremely promotional holiday season, and many stores will offer special deals to loyal customers. Consider signing up for emails from your favorite stores, and also keep an eye on their websites, twitter feeds and facebook pages. And don’t forget the traditional method of scoring coupons- the newspaper.

Rihanna and 8 Other Celebrities Who Sued Their Financial Managers

Its easy to look at celebrities and envy their glamorous, filthy-rich lifestyles. One thing most celebrities seem to have in common, however, is that they are all popular targets for money scams. When you rake in millions of dollars each year, it can be hard to find a financial manager who doesnt want to take a big cut of that — with or without their permission.

Here are the top nine celebrities who have sued their financial managers for mismanaging and stealing funds.
1. Sting

In 1995, Keith Moore, Stings financial advisor of 15 years, was finally caught for swindling Sting out of $9.8 million. Moore had set up 100 different financial accounts for the singer, carefully siphoning money from each one. Sting was criticized for not noticing that so much of his money was missing; Moore was eventually sentenced to six years in prison.

Photo credit: Yancho Sabev (via Wikimedia Commons)
2. Elton John

Elton John sued his accounting firm, PricewaterhouseCoopers, and his business manager, Andrew Haydon, saying that they had mismanaged approximately $29 million of his tour funds. Unfortunately for John, the court decided there was insufficient evidence to prove the scam. To add insult to injury, the singer lost over $10 million in case fees.

Photo credit: Ernst Vikne (via Wikimedia Commons)
3. Rihanna

Pop star Rihanna filed a lawsuit against Berdon LLP in 2012 for mismanagement of funds, improper tax filing and keeping an unfair percentage of profits. She also blamed Berdon LLP for not letting her know she was losing money on her 2010 Last Girl on Earth tour. Berdon LLP fired back that it was the singers exorbitant spending habits that were actually to blame for the tours failure, but ended up offering Rihanna a more than $10 million settlement.

Nicki Minaj Vs. Rihanna: Who Go Broke First?

Photo credit: Jørund F Pedersen (via Wikimedia Commons)
4. Patricia Cornwell

Patricia Cornwell is a best-selling crime writer that was forced to do some sleuthing into her own fortune management. She sued New York accounting firm Anchin, Block amp; Anchin LLP for financial negligence that cost her and her partner millions of dollars. Cornwell won her case in February 2013 and received $50.9 million.

Photo credit: Patricia Cornwell Facebook
5. Billy Joel

In 1989, Billy Joel filed a $90 million lawsuit against his ex-manager and former brother-in-law, Frank Weber, for committing fraud. This lawsuit opened up more lawsuits against Joels own lawyers and accounting firm. After a lot of time in court, Joel walked away with only $8 million.

Photo credit: Billy Joel Facebook
6. Ben Stiller

Funny man Ben Stiller found himself in a not-so-funny situation when his financial advisor, Dana Giacchetto, started swiping funds. Giacchetto ended up taking $250,000 from Stiller, but the actor was lucky enough to get that money back. Giacchetto allegedly scammed other A-listers, including B-52s singer Fred Schneider, actor Tobey Maguire and actress Cameron Diaz. Though those cases were never clearly resolved, Giacchetto served a prison sentence of three years.

How Uma Thurman, Ben Stiller and Other A-Listers Got Scammed Out of Their Money

Photo credit: Eva Rinaldi Celebrity and Live Music Photographer (via Wikimedia Commons)
7. Uma Thurman

Uma Thurman hired Kenneth Starr as her financial advisor, but Starr decided to dip into $1 million of her funds to support his exotic-dancing significant other instead. Once Thurman found out he was doing more than her taxes, she demanded her money back. She was lucky enough to get it the next day, but only because Starr took funds from other clients accounts to repay her. He was arrested in May 2010 when the FBI paid him a house call.

Photo credit: Joella Marano
8. Nicholas Cage

In 2010, Nicholas Cage sued former business manager Samuel J. Levin and his firm for $20 million, saying they gave him bad financial advice and mismanaged his money. Levin was Cages financial manager from 2001 to 2008 and had collected millions of dollars in financial management fees; he countersued for fees Cage allegedly owed. Later in 2010, all claims were reportedly dismissed.

Photo credit: Gerald Geronimo
9. Ricky Williams

Ricky Williams, the former University of Texas and NFL running back who won the 1998 Heisman Trophy, was too trusting of his financial advisor Peggy Fulford and King Management Group. Fulford transferred at least $6 million of Williams money out of his account without his knowledge or consent. As of January 2014, this case was moved to a federal court in South Florida.

Photo credit: Jade Mingus Twitter

Celebrities know how to make money, but they do not always know how to manage it. When you make big figures, you can expect a lot of people to try to profit of it. Unfortunately for the nine celebrities above, they had to find out the hard way who they could and couldnt trust with their money.

$200000 financial aid scam hits Bay Area college

Police at the College of Marin are investigating 23 individuals suspected of posing as students in a plot to steal $200,000 in federal financial aid, some of which has already been paid out by the college.

Two vigilant faculty members brought the suspected scam to the attention of college administrators after noticing that several students in their online classes shared the same address and phone number, werent participating in online discussions and withdrew soon after financial aid had been disbursed.

Such financial aid scams are increasingly seen at colleges across the country. They are estimated to cost taxpayers up to $1 billion a year and have federal investigators stretched to the limit figuring out how to stay ahead of the thieves.

In one recent example, three men posing as students pleaded guilty in February to stealing more than $1 million in financial aid received through City College of San Francisco, Chabot College in Hayward and Ohlone College in Fremont from 2007 and 2011.

In the scam – which targets mainly online programs – the thief enrolls in college and applies for a student loan or a federal Pell Grant, which provides up to $5,730 this academic year. Unlike loans, Pell Grants require no repayment. After the college takes its cut of the grant or loan and forwards the rest to the applicant for approved expenses – books, room and board, commuting – the thief keeps the money, quits attending class, and runs off to repeat the process at another college. The scam has been dubbed Pell running.

Fake students recruited

A ringleader often recruits fake students who allow their Social Security numbers and other personal information to be used to enroll in courses and to apply for federal aid in exchange for a cut of the cash.

The anonymity of online classes, which are exploding in popularity at community colleges, makes them an easy target.

Community colleges are also vulnerable because their fees are low, so the schools keep little of the Pell Grant money for themselves. In California, they take no fee because those who qualify for a Pell Grant – only needy students – also receive a fee waiver from the state chancellors office.

The scam usually goes undetected. But at the College of Marin in Kentfield, the two faculty members were paying attention.

Putting 2 and 2 together

Their information helped us put two and two together, said Jonathan Eldridge, a vice president at the community college who declined to identify the instructors or their courses because the investigation is ongoing and some of those under suspicion are still enrolled. Its difficult to identify these issues. And once identified, its difficult to take action.

Obviously, we want to be doing the right thing. Weve involved our campus police, and were collecting data. Then well have as much evidence as possible to give the US Department of Education.

The 23 students are eligible for a total of $200,000, Eldridge said. The college has already given them some of that aid, though Eldridge didnt know how much.

One instructor at the College of Marin discussed the situation with a friend, Mayor David Weinsoff of Fairfax, who grew alarmed at the brazenness of the alleged thieves. Theres not enough money to go around, and here you have people cheating, he said. Theyre taking our hard-earned tax dollars.

Collect aid, then drop out

Weinsoff spoke with college officials and learned that 1,290 students who collected nearly $192,000 in federal aid between 2009 and 2013 had quit the College of Marin before completing the course units required for them to keep the money. While those students may have had legitimate reasons for dropping out – and may even have returned the aid – the pool of money could represent earlier fraud.

Colleges are not responsible for paying back stolen money. But if thieves steal student-loan money and never pay it back, it can count against the college by adding to the schools student loan default rate.

In the case involving City College of San Francisco, Chabot and Ohlone, the three men – Kyle Edward Moore, Cortio Detrice Wade and Marcel Devon Bridges – created 104 separate financial aid accounts for purported students with the passwords maubert or maubert2, and used two addresses in Oakland and Hayward, according to a federal indictment filed in the US District Court in Oakland in August 2013.

By law, those eligible to receive Pell Grants or federal student loans need to have a high school diploma or equivalent, be enrolled or accepted at a college, and not be incarcerated. In addition, applicants must certify that they are the legitimate applicant and that they will use the funds only for educational purposes.

Straw students

In this case, Moore, Wade and Bridges recruited third parties to serve as straw students who signed and submitted false and fraudulent financial aid applications and had no intention of attending school or using the funds for their intended purpose.

In August, Bridges was sentenced to one year in prison, three years of supervised release and ordered to pay $73,087 in restitution. Federal officials were unable to confirm the fate of Moore, Wade or Derricka Lynn Fluker, who was indicted with them.

By the end of March, 132 fraud rings were under investigation by the US Department of Educations Office of the Inspector General, up from 16 a decade ago.

In its semiannual report to Congress, the office said it had recovered more than $20 million from more than 478 indictments. These have included thieves who use inmates identities to apply for aid.

$1 billion nationwide

But the actual number of fraud rings – and the amount of taxpayer money, estimated at $800 million to $1 billion a year – is likely to be far larger.

Its a serious number, said Howard Sorensen, assistant counsel to the inspector general. Colleges are choosing to admit students with only minimal checks on their applications – but people arent always who they say they are, and they arent showing up for classes.

His office has urged Congress to strengthen requirements for student aid, which relies on the honor system for requirements such as a high school diploma. But Congress has rejected such recommendations as requiring confirmation of diplomas and even identity before awarding financial aid.

Financial makeover: How to plan happy retirement

When the paychecks stop coming, will you have enough money to enjoy your new stage in life?

In a recent survey by the Federal Reserve, 31% of non-retired respondents said that they didnt have any retirement savings or pension. Worse yet, nearly 20% of those respondents were 55 to 64 years old, highlighting a growing concern that many Americans are ill-prepared for their golden years.

Why should I save?
Gone are the days in which pensions and Social Security served as comfortable cushions for retirement. Thanks in part to an increasingly older population, its crucial to start preparing for retirement as early as possible, by contributing to 401(k) plans and Individual Retirement Accounts (IRAs)or thinking about alternative sources of income.

If you havent done so, its not too late to get started. NerdWallet, a company dedicated to helping people save money, recently ran a Financial Makeover Contestin which winners were paired with financial planners to evaluate their retirement savings plans.

Delia Fernandez, a Southern California certified financial planner, went one-on-one with contest winner Jack. He plans on retiring in the next year or two and wants to make sure that he and his wife will be financially comfortable once he stops working.

The conversation between Fernandez and Jack shed light on several important things to consider when building a retirement fund.

Know how much money youll need each year
First things first: Fernandez advises anyone thinking about hanging up their boots to begin by determining how much money theyd like to spend each year during retirement. Consider health costs, mortgages, insurance, and travel costs. Dont hold back: Include anything that you may need or want to spend money on during retirement.

Now, to see if that annual amount is affordable, examine all possible sources of income, such as pensions, savings plans, assets and investments.

Maximize your pension
Although it would be nearly impossible to rely exclusively on your pension during retirement, its important to make the most of what you have.

Jack, for example, has two pensions from the two main jobs that hes held in his career. The larger of the two will pay about $300 a month if he starts taking monthly distributions at age 62.

When thinking about how you want to receive your pension, youre probably going to decide between a lump sum distribution and monthly installments.

It comes down to whether both spouses are comfortable managing money, Fernandez says. If so, go with monthly distributions. If, however, one spouse feels like he or she is better at managing money than the other, then a lump sum distribution might make more sense–it would allow the savvier money manager to decide what to do with the pension funds (that is, if and how to invest) while he or she is still in good health.

Factor in 401(k) plans and Individual Retirement Accounts (IRAs)
Ideally, a retiree will be able to withdraw money from his or her 401(k) plan and/or IRA(s) once he or she calls it quits. Regardless of the amount of money in these accounts, the sum needs to be taken into consideration when calculating how much money youll be able to spend each year during retirement.

Its worth noting that there is an early withdrawal tax and penalty for taking money out of a 401(k) plan before age 59½. If at all possible, keep contributing to your account until you reach that age. After decades of smart, careful saving, youll want to avoid unnecessary fees whenever possible.

Consider your assets
Along with savings from 401(k) plans and IRAs, assets like houses, cars, and other pieces of property can be great sources of money during retirement.

Jack, for instance, owns two homes and plans to sell one in the coming years. The money spent on mortgage payments could then be put toward something like medical insurance, which can be quite costly. Jack spends about $2,000 a month on medical insurance for himself and his wife.

Be prepared to shake up your investment strategy
Part of enjoying a financially sound retirement is revisiting – and probably revising – your investment portfolio. Retirees are often advised to shift asset allocation toward bonds, which arent as risky as stocks.

That doesnt mean that you have to stop investing altogether, though.

Jack admits that almost all of his funds are in the stock market. While Fernandez says shes comfortable with how Jack allocates his funds, she also recommends that he adopt a more conservative investment strategy once he retires. According to Fernandez, Jack understands the risks he is taking and can manage [his portfolio].

If you arent quite as comfortable handling your own investments, a financial planner could go a long way toward ensuring your portfolio isnt too risky.

Anticipate change
Its no ones favorite topic. But its crucial to set up a trust in case anything should happen to you or your spouse, Fernandez says.

Jack, for example, does not have a trust in place. That means that, if were to pass away within the next year, that house sale would be delayed. Without a trust, this transfer could cost nearly $15,000 in legal fees. With a trust in place, Fernandez says, Jacks wife could avoid these fees and the transfer process would be much quicker.

Building a robust retirement fund is a multi-step process that involves several different moving parts. The sooner you start thinking about it, the better prepared youll be to relax and enjoy your post-working life.

NerdWallet is a USA TODAY content partner providing general news, commentary and coverage from around the Web. Its content is produced independently of USA TODAY.

Navigating Financial Milestones: Taking Control of Your Personal Economy in a …

A strong personal economy has, historically, been built on traditional pillars: Make smart investments, manage expenditures, and build sound credit history. But in todays increasingly interconnected world, that alone wont cut it. Pursuing career, business, education and even retirement goals is challenging enough, but when you add in the complexity of todays global economy – such as currency fluctuations and market volatility due to sovereign debt crises – your financial picture can seem more vulnerable than ever.

Managing risks and identifying growth opportunities calls for savvy planning and forward thinking when it comes to lifes major financial milestones. Lets take a look at four common milestones that should be weighed in every familys financial plan, along with a few planning guidelines for global individuals.

1. Career: Planning your path whether expat or entrepreneur

Stagnant economic growth in the US and attractive career and business opportunities abroad are pushing people to travel the world in search of new experiences and pathways to success. Calculated career moves abroad can be rewarding, but can also put you underwater when poorly planned. Here are a few variables to consider when taking your skills across the border:

  • Plan around and take advantage of exchange rates. The purchasing power of money earned overseas country will be different from the USD – a factor frequently overlooked when moving assets from one currency to another.
  • Accessing funds remotely creates a taxable event – similar to ATM fees, only much more expensive. Be mindful when accessing portfolios to prevent excess taxes and fees – while still ensuring you have liquidity to manage daily expenses and unexpected costs.

2. Mortgage: Buying a home requires a strong financial foundation

Purchasing property abroad can be a difficult and expensive process. The number of fees, taxes and closing costs, on top of property costs, can quickly put what looks like a reasonable investment over-budget. A few things to consider:

  • Credit history vanishes when moving abroad and the rules that constitute good credit change completely. A 750 credit score in the US may mean nothing in, say, Barbados. It is possible to leverage already existing bank accounts and credit lines, however, especially when those assets are held at an international bank. When considering a move, have an international financial institution conduct proper due diligence.
  • The laws and protections afforded to home buyers vary widely across international markets. Lenders can abstain from lending to US buyers for any number of reasons–including old age. US citizens looking to buy abroad need to be cognizant of the potential discrepancy in fair lending practices.

3. Education: The ABCs of paying for college

According to a recent HSBC study, more than one in two parents believe that paying for a childs education is the best investment you can make. Not surprisingly however, more than a third of adults say they find making financial decisions about their childs education daunting. Below are some key considerations when planning for your familys education needs:

  • Plan around your earning potential. Many parents will be paying for their childrens college tuition in their 50s, which puts them past their peak earning potential. This makes saving early vital. According to HSBC, 51% of parents wish they had begun saving and planning for their childs tuition earlier.
  • Consider all avenues: Factoring in inflation and the increasing costs of education mean that all savings avenues should be explored to maximize interest. Weigh all viable options, including 529 plans, deferred compensation plans and traditional taxable brokerage accounts. There are also generous education-related tax benefits available that many people arent aware of, but should be taken advantage of.

4. Retirement: Save while youre young – it never gets old

People are living longer and saving less for retirement, yet the cost of living around the world continues to rise. According to a recent HSBC study, more than 20% of people arent doing anything to prepare for retirement, and nearly half (48%) reported fear of not having enough money to live on during retirement. Heres what you need to think about to bridge the gap between your dream retirement and financial reality:

  • Calculate your cost of living. High taxation for high earners, increasing health care costs and long-term care challenges have raised the price of retirement in the US Whether you choose to retire in the US or settle elsewhere, you should calculate your own true cost of retirement and how far your funds will take you by talking to a trusted financial advisor.
  • Discover your axis: Everyone has a different vision for retirement. Identify what is important to you – whether it be travel, generous gifts for grandchildren, or philanthropy – and discuss it with your spouse and with your financial advisor to make sure it is feasible.

Navigating these milestones requires sound financial management and foresight into all variables that may come into play in todays global stage. Planning early is optimal, but its never too late to get started. Understand the tools that are available to you, and dont hesitate to seek the help of a trusted financial advisor who can help you take control of your future for a better tomorrow.