6 Basic Retirement Rules

The following Retirement Rules will equip you with basic strategies to help you build your retirement fund.

For most people "retirement" is seen as a time during which you withdraw or cease from work. However, there is never a time in which we stop having value or influence in the lives of others.  In fact, God has created us to minister to others for a lifetime. In order to faithfully serve God in your retirement years, you must first make sure those years are funded.

Rule 1:  Save at least 10% of your income towards your Future Funded Ministry plan

This provides a simple target for you to work towards as part of a disciplined savings approach. You may start at a lower level and then focus on increasing your contributions over time to get to this percentage.

Rule 2:  Plan on living 20-25 years in retirement after age 65

People who live to age 65 have a 50% chance of living to age 85 and a 25% chance of living until 92.

Rule 3:  Plan on needing 70% to 80% of your income in your Future Funded Ministry years

Certain expenses will likely disappear or be reduced once you leave the workplace.

Rule 4:  To make your savings last, withdraw less than 4% a year

This simple formula has proven very accurate over time. It provides a guideline for how much to withdraw each year without exhausting your retirement savings.

Rule 5:  Rebalance your asset allocation at least once per year

Rebalancing is when you adjust your portfolio back to an appropriate asset allocation mix. This keeps your investments aligned with your risk tolerance and goals.

Rule 6:  Bonds percentage of your portfolio equals your age

This rule is a reminder that your portfolio needs to change as you age, becoming gradually more focused on avoiding risk and providing income.

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For questions regarding retirement planning, contact a service specialist today!

6 Smart Retirement Plan Investing Tips

If you haven’t put away money for retirement, now is the best time to start! The thought of saving enough money for those 30 plus years of retirement sounds daunting, but if you’re well prepared, you will have nothing to worry about.

Here are 6 tips that will help you with successful retirement plan investing.

1. Know Your Investment Options

There are many different ways you can invest your money. If you’re employed, find out what kind of retirement benefits your employer offers.

There are different types of retirement plans such as:

• 401(k)/403(b)/Company Plans

• Traditional/Roth IRAs

• And More!

As well as different types of portfolio investments such as:

• Mutual Funds

• Exchange Traded Funds (ETFs)

• And More!

It’s important to understand the risk/reward return when you’re building your portfolio. Generally, more aggressive (higher risk) investments may deliver higher average returns over time, however, this is offset by a higher potential for loss of principal compared to safer, more conservative investments. Generally, those nearing retirement will opt for a lower risk/lower return because they have less time to recover from loss.

2. Start Saving Early

It seems easy enough, but many people feel like they can’t start saving for retirement when they‘re younger because they’re not making enough. Here’s the thing—you don’t need to save 10% of your income right away. Start saving 3% and as your pay increases, gradually increase how much you’re investing.

The earlier you start saving, the more you will have in retirement. You will also have the time to invest more aggressively and should be able to recover from any loses.

3. Set Goals

Decide when you want to retire, what you want to do in retirement, and how much money you’ll need to live off that lifestyle.

For example:

• I want to retire at 65.

• I plan on paying off my house and all debt before retirement.

• I plan on traveling.

• I plan on having medical expenses.

• Based on my plans, I’ll need $48,000 per year in retirement.

• I estimate that I’ll live 20 years in retirement. Thus, I’ll need a minimum of $960,000 saved. Keep in mind that this does not take into consideration inflation, taxes, any changes to social security or investment earning rates, etc. It is also very likely that you could live longer than 20 years after you retire.

4. Keep Your Emotions in Check

Don’t let your emotions direct the way you deal with your investments. Understand that they will fluctuate—sometimes a lot, sometimes a little. If certain investments don’t seem to be doing well, look for another one.

5. Know Your Fees

All investment companies have expenses for the services that they provide. Unfortunately, most people do not know this because they haven’t been given complete and accurate value expense disclosure information. It’s a good idea to find out how much you are paying fees and search around for better options if you think they are too high.

6. Ask Questions

At Envoy, our service team is always available and happy to serve you. Please contact us with any investment questions you might have and we will be happy to direct you to the right answer.

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Looking for faith-based IRA options? The FaithBased IRA from Envoy Financial could be the perfect solution for you!

Understanding Your Investment Risk

Risk is defined as the proportionate degree of gain or loss of any specific investment or portfolio.

Risk is generally separated into three categories:

1. Conservative—least amount of risk

2. Moderate—somewhat conservative and somewhat riskier

3. Aggressive—the riskiest strategies with riskier investments.

Generally speaking, more aggressive (higher risk) investments may deliver higher average returns over time. However, this is offset by a higher potential for loss of principal compared to safer, more conservative investments. That, of course, means the opposite is true as well—the less risky the investment, the lower the risk of loss of principal and of course the lower potential for reward (lower return).

Everybody has a tolerance for risk equal to the three categories of risk: conservative, moderate, or aggressive.

Your tolerance for risk impacts how you will react when an investment moves from up to down during its volatility cycle.

• How do you know your risk tolerance?

• How much risk can you stand before you panic and make bad money decisions?

You can determine your risk indicator, a number that signifies where you fall on a risk tolerance scale. You do this by answering a few key questions.Your risk indicator will help you understand how to approach investment choices.

Let’s take a few minutes to determine your risk level. How much volatility, up and down in the value of an investment, can you stand? Let’s start by determining your risk tolerance. Go to https://www.envoyfinancial.com/education and click Determine Your Risk Tolerance.

If your investments mirror your tolerance for risk, it is more likely that you will persevere and create that sustainable portfolio previously described.

If you want to know more about your risk tolerance, contact an Envoy specialist who can help answer your questions.

View Risk Definitions for a more detailed explanation on the types of risk.