Lessons Learned from the Government Shutdown

As a financial advisor, I see a situation like this and I want to go a step further. In thirty-five days many things can happen and for approximately 800,000 Americans, thirty-five days probably felt more like an eternity, since they worked without pay or were suspended until further notice due to the closure of the government. Unfortunately for the workers who have been the most affected by this, nobody saw it coming. For a long time, working for the government was seen as “the desired job” to have. The benefits, the pay and the security were all incomparable. However, this recent problem has revealed many difficult truths and valuable lessons for all since something unexpected can happen to any of us. I wonder why so many working Americans have no savings and how we can help them. More importantly, I wonder how they can position themselves better for their next setback. Many of these newly unemployed are people who work hard and have a paid job, but yet the loss of a paycheck prevents them from paying their bills. Of course, some of these situations may involve the financial challenge of having to pay for a single event, such as a medical emergency. But in other cases, the reality is that people simply do not save enough. Ultimately, what we are learning from this closure is that individuals are responsible for their own financial freedom. If that’s something you’d like to achieve, here are some steps to get to that goal.

Lesson # 1: An emergency fund is a necessity, not an option.
According to Bankrate, about 65% of Americans have little or no accumulated savings, and according to CNBC, only 37% of retirees have more than $ 100,000 saved for retirement. In addition, 60% do not even know how much you need to save for retirement. If you are new to the world of savings, saving money for an emergency seems unnecessary and, sometimes, too difficult. There are regular monthly bills and then the unexpected repair of cars, medical bills or family emergencies that compete for part of the budget. Think of how much more difficult it is to suddenly lose your income and, literally, not having anything to turn to.
Consider opening a savings fund so that the funds are not so readily available for capricious expenses. Then, set up automatic transfers every month, every week or whatever suits you best. Do not get caught up in the amount you can save. Even if it’s only five dollars, start there! The goal is to get the momentum.
The recommended amount of savings is three to six months of living expenses. If that seems too intimidating, make your first goal $ 1,000 in savings. One day you will see that account and you will be glad you started.

Lesson # 2: Life insurance that does not depend on your employer.
The closure of the government has affected hundreds of thousands of government employees. Many of these employees have life insurance policies with the Federal Employees Group Life Insurance (FEGLI). Although the benefits of FEGLI do not seem to be affected by the closure yet, the money to cover these benefits could disappear quickly if the closure continues. Many sources report that the closure could cost around $200 million each day.
Although FEGLI may have seemed like a good offer when it was first offered to you, the unfortunate truth is that your benefits may no longer be guaranteed. Even if this chaos does not continue to persist, there is no real assurance that the government will not become unstable once again in the near future. If you are a government worker and already had life insurance with a private insurance company, you would not have to worry about the security of your money and the benefits of your life insurance. You can also find a plan that offers more affordable premiums than FEGLI.
The closure of the government affects American benefits, more specifically, many families are suffering because they have not been able to claim death benefits during the government shutdown.
My advice is do not let anyone determine your future. You are the one who needs protects your family, since it’s not your employer’s responsibility to put your family first.

Lesson # 3: Consider the big picture.
This approach is good but stepping back from time to time to see how your financial decisions are affecting your future in general is even better. Use credit cards responsibly. Choose not to use credit cards or be sure to charge only an amount that you can pay in full each month. You may have agreed to make minimal payments by credit card without realizing that hundreds or even thousands of interest is accumulating over time. Remember, any monthly balance is evaluated at a very high interest rate.
Reassess all your current financial habits and objectives to see if they will bring you closer to where you want to be in the long term.

Lesson # 4: Teamwork makes the dream work.
If the recent closure of the government has not taught us anything, it should show us how important cooperation is. When even one person just one person on the same team is inflexible, it can create a serious obstacle and have many ramifications.
This will require some honesty, self-reflection and commitment. Saving is easier for some, while others like to spend more. Having an early conversation about each person’s money focus will help consolidate what financial focus the partner will assume. In addition, agreeing with what is considered an important purchase can avoid future arguments and play the game of guilt.
Each person’s point of view is different, so there is no place for assumptions. In order to keep the same final goal in mind you must flesh out all financial objectives together. You owe it to yourself, your partner and/or your family to live the life you have imagined.

Conclusion
With the closure of the government in the news, the focus is on those who, unfortunately, did not receive a paycheck. But their situation is not exclusive to them. If you are one of the millions of Americans who are not prepared for a financial setback, consider you take the first step of setting a goal to take control of your financial life. While it may seem stressful to focus on the necessary steps, eventually, as you become familiar with the concepts of financial planning and save a few dollars, you’ll end up of having immense peace of mind.

Lecciones Aprendidas del Cierre del Gobierno

8A628B16-F3A5-408A-85B1-0C2ADC9235E9

Como asesor financiero, veo una situación como esta y quiero ir un paso más allá. En treinta y cinco días pueden pasar muchas cosas y para aproximadamente 800,000 estadounidenses, treinta y cinco días probablemente se sintieron más como una eternidad, ya que trabajaron sin paga o fueron suspendidos hasta nuevo aviso debido al cierre del gobierno. Desafortunadamente para los trabajadores que han sido los más afectados por esto, nadie lo vio venir. Durante mucho tiempo, trabajar para el gobierno fue visto como “el trabajo deseado” a tener. Los beneficios, la paga y la seguridad eran todos incomparables. Sin embargo, este reciente problema ha revelado muchas verdades difíciles y valiosas lecciones para todos ya que algo inesperado le puede ocurrir a cualquiera de nosotros. Me pregunto por qué tantos estadounidenses que trabajan no tienen ahorros y cómo podemos ayudarlos. Más importante aún, me pregunto cómo pueden posicionarse mejor para su próximo contratiempo. Muchos de estos recién desempleados son personas que trabajan arduamente y tienen un empleo remunerado, y sin embargo, la pérdida de un cheque de pago les impide pagar sus cuentas. Por supuesto, algunas de estas situaciones pueden implicar el desafío financiero de tener que pagar por un evento único, como una emergencia médica, pero en otros casos, la realidad es que las personas simplemente no ahorran lo suficiente. En última instancia, lo que estamos aprendiendo de este cierre es que los individuos son los responsables de alcanzar su propio objetivo de libertad financiera. Si ese es uno de sus objetivos, aquí hay algunos pasos para comenzar.

Lección # 1: Un fondo de emergencia es una necesidad, no una opción.
Según Bankrate, alrededor del 65% de los estadounidenses tienen poco o ningún ahorro acumulado, y según la CNBC, solo el 37% de los jubilados tienen más de $ 100,000 ahorrados para la jubilación. Además, el 60% ni siquiera sabe cuánto necesita ahorrar para la jubilación. Si eres nuevo en el mundo de los ahorros, guardar dinero para una emergencia parece innecesario y, a veces, demasiado difícil. Hay facturas mensuales regulares y luego la reparación imprevista de automóviles, facturas médicas o emergencias familiares que compiten por una parte del presupuesto. Piense en cuánto más difícil es perder repentinamente sus ingresos y, literalmente, no tener nada a lo que recurrir.
Considere abrir un fondo de ahorros para que los fondos no estén tan fácilmente disponibles para gastos caprichosos. Luego, configure transferencias automáticas todos los meses, todas las semanas o lo que sea que más le convenga. No se deje atrapar por la cantidad que puede ahorrar. ¡Incluso si son solo cinco dólares, comienza allí! El objetivo es conseguir el impulso.
La cantidad recomendada de ahorros es de tres a seis meses de gastos de manutención. Si eso te parece demasiado intimidante, haz que tu primer objetivo sea $ 1,000 en ahorros. Un día verás esa cuenta y te alegrarás de haber empezado.

Lección # 2: Un seguro de vida que no dependa de tu empleador.
El cierre del gobierno ha afectado a cientos de miles de empleados del gobierno. Muchos de estos empleados cuentan con pólizas de seguro de vida con el Seguro de Vida de Grupo de los Empleados Federales (FEGLI). Aunque los beneficios de FEGLI no parecen verse afectados por el cierre todavía, el dinero para cubrir estos beneficios podría desaparecer rápidamente si el cierre continuaba. Muchas fuentes informan que el cierre podría costar $ 200 millones cada día.
Aunque FEGLI puede haber parecido una buena oferta cuando se le ofreció por primera vez, es posible que sus beneficios ya no estén garantizados. Incluso si este caos no dura mucho tiempo, no puede estar seguro de que el gobierno no se volverá inestable en el futuro. Si tuviera un seguro de vida con una compañía de seguros privada, no tendría que preocuparse por la seguridad de su dinero y los beneficios de su seguro de vida. También puede encontrar un plan que ofrezca primas más asequibles que FEGLI.
El cierre del gobierno afecta los beneficios estadounidenses, más específicamente, las familias están sufriendo porque no han podido reclamar beneficios por muerte.
No dejes que nadie determine tu futuro. Se usted quien proteja a su familia, ya que no es responsabilidad de su empleador poner a su familia en primer lugar.

Lección # 3: Considera el panorama general.
El enfoque es bueno, pero retroceder de vez en cuando para ver cómo sus decisiones financieras están afectando su futuro en general es aún mejor. Utilice las tarjetas de crédito de manera responsable. Sin embargo, elija no usar tarjetas de crédito o asegúrese de cargar solo una cantidad que pueda pagar en su totalidad cada mes. Tal vez usted haya estado de acuerdo con realizar pagos mínimos con tarjeta de crédito sin darse cuenta de que cientos o miles de intereses se están acumulando con el tiempo. Recuerde, cualquier saldo mensual se evalúa a una tasa de interés muy alta.
Reevalúe todos sus hábitos y objetivos financieros actuales para ver si lo acercarán más a donde quiere estar a largo plazo.

Lección # 4: El trabajo en equipo hace que el sueño funcione.
Si el reciente cierre del gobierno no nos ha enseñado nada, debería mostrarnos cuán importante es la cooperación. Cuando ambas partes en el mismo equipo son inflexibles, puede crear un obstáculo serio y tener muchas ramificaciones.
Esto requerirá cierta honestidad, auto-reflexión y compromiso. Ahorrar es más fácil para algunos, mientras que a otros les gusta gastar más. Tener una conversación temprana sobre el enfoque del dinero de cada persona ayudará a consolidar qué enfoque financiero asumirá la pareja. Además, acordar con lo que se considera una compra importante puede evitar futuros argumentos y jugar el juego de la culpa.
El punto de vista de cada persona es diferente, por lo que no hay lugar para suposiciones. Mantenga el objetivo final en mente, que es eliminar todos los objetivos financieros juntos. Te debes a ti mismo vivir la vida que has imaginado.

Conclusión
Con el cierre del gobierno en las noticias, la atención se centra en aquellos que, lamentablemente, no recibían un cheque de pago. Pero su situación no es exclusiva de ellos. Si usted es uno de los millones de estadounidenses que no están preparados para un contratiempo financiero, es importante que empiece a tomar el control de su vida financiera. Y si bien puede parecerle estresante concentrarse en los pasos necesarios, eventualmente, a medida que se familiarice con los conceptos de planificación financiera y ahorre unos pocos dólares, es posible que tenga una gran tranquilidad.

Independence Day and Financial Freedom

IMG_1486

Today 4th of July we celebrate in the U.S. The Independence Day! Many people fought together for a dream, a dream that included political freedom and economic freedom that ultimately links to what financial freedom is all about! It is amazing, as new American Citizen, see the sacrifices that were made over and over by people who started this great idea, “freedom”. Today our goals are consistent with those of The Declaration of Independence. We all want life, liberty, and the right to pursue happiness. However, the big difference today from 1776 is that the roadblocks we face in obtaining those goals are in every corner of the planet.
Thus, what is the picture of our freedom today? We think spending money is our patriotic duty. Credit cards are designed to look like the United States flag, expensive cars are marketed as living the good life, and to complete the American Dream a big luxurious house. The reality is that spending money and depleting our resources without education is hindering our independence.
As you enjoy the 4th of July festivities today, I encourage you to ponder the goals that you’re fighting for and more important work them out and imagine how you’ll celebrate your own financial independence day!

How to improve my financial situation in 2019?

Plan2016The beginning of the New Year is a good time to reflect upon the past year, 2018. It is crucial to take a step back and evaluate your current position in your career, your personal relationships, your health, and even, your personal finances. To do this, it is important to have a thorough understanding of yourself. Who are you? Are you happy where you are, and, if the answer is no, then where do you want to go? In the field of our personal finances, it is essential that one set goals, keep track of these goals by carrying out a sequence of events or a game plan throughout this new year. And, as a result, hold yourself accountable for these 2019 goals to reap the benefits of a higher plan to you achieve your dreams.
Why is it important to have a good personal finance plan?

Having a personal financial plan offers both short-term and long-term benefits for different types of people, and their families. For example, studies reveal that having a good financial health people get a state of optimal greeting, increase productivity in its various activities and a solid basis for every stage of life.

However, if we do not plan and effectively execute our financial plans, the consequences could be devastating for families. Different researchers have found that having financial difficulties affect more people than smoking and obesity. While 20% of the U.S. population smokes and 30% are obese, more than 70% are worried about their finances. Elizabeth Scott, M.S. found that the anxiety caused by the financial stress, can negatively affect one’s productivity and health, including, eating, drinking, smoking habits. This statistic is due to the fact that many of us, like you and me, avoid facing these financial tensions in a constructive manner.

Financial stress causes loss of sleep, which can damage then your immune system and cognitive skills. A decreased immune system can lead to an increase in illnesses and, paradoxically, a decrease in the cognitive abilities, which triggers bad financial decision-making. As a result, bad financial situations lead to spending your income on additional check ups and prescriptions, etc. Money goes to doctors, not to spend more, compounding the small problems that then become a major problem. The stress invades people affecting the daily lives of the people. Increases absences from work and the lack of concentration in the activities to be carried out. The product of these stresses in many American families has been personal bankruptcy, a drastic to exit the problem, but it doesn’t propose a real solution to the problem.

What to do before this problem? 

In this column we will discuss the fundamental steps to exit this financial disease that has invaded a hefty percent of the population in the U.S. The objective of a financial plan is to change the behavior of each one of us with regard to our finances. The path toward a behavioral change is not a simple task. If it were, the population would exercise regularly and cease smoking, as well as eating junk food. Therefore, a behavioral change demands awareness and education, including changes in behavior, to be able to achieve results.

 The First Step:
We must understand the steps involved to attack the problem in a holistic manner, i.e. your debt, expenses, savings and income. Understanding our current financial status is imperative; therefore, we must follow a logical order to achieve our goals. An analysis of our financial needs is fundamental, followed by a detailed budget. It is important to know what are the fixed costs and how much is the money is leftover to determine their activities. In this budget we must identify that the projected costs are estimated correctly and reallocate, if necessary. However, when our income is not enough to cover our projected expenses we must make adjustments to our behavioral consumption so that this is consistent with our possibilities.

Another important factor in the budget is income. The equation is simple: revenue minus expenses may reflect a positive balance (that can be used for saving or payment of debts). Or it may reflect a negative balance, which indicates that one is spending more than the income generated. What to do? As I mentioned above in the first step, maintaining control over expenses is critical. The second is to try to obtain more income. By reviewing the budget, we must also review the current situation of employment. Perhaps you decide to request an increase in your salary if you deemed it appropriate given your credentials, or you may opt to find new job choices. In such cases, creativity must come into play to help you find alternatives you may have not previously considered. We all can hone in on each of our skills and abilities to be able to generate additional income to create a positive change in our lives.

If we really want to change our lives and achieve financial freedom, it is extremely important that we satisfy our debt and obligations. We must be conservative with our expenses and constantly work to pay off our debt, in order to improve our financial performance and be able to obtain better benefits in the future.

What are you willing to fight for? Why do you want to become financially independent? Once you find the answers to these questions you will find the way to accomplish these goals. In order to carry out a financial plan it is also important get educated. Education is essential to improve your personal finances. So I challenge you to add to the top of your New Year’s Resolutions to purchase a finance/economic or personal development book. In addition to this, get in contact with a financial advisor who can help you, you can also seek online/offline courses, etc. After all, I wish you the best in your quest to improve your personal finances and hope this New Year is able to bless us with health, love and financial freedom! Happy 2019!

¿Como mejorar mi situación Financiera en el 2020?

Plan2016     El inicio del Año Nuevo es un buen momento para reflexionar sobre el 2019 y tener un nuevo comienzo, en varias áreas de tu vida, por ejemplo, en tu carrera profesional, en tus relaciones personales, en tu salud, o en tus finanzas personales. Para ello es importante entender muy bien quienes somos y hacia donde queremos ir. En el ámbito de nuestras finanzas personales es fundamental que nos fijemos objetivos para saber hacia donde vamos, llevar una secuencia y así poder alcanzar nuestros sueños.

 ¿Por qué es importante tener una buena planificación de nuestras finanzas personales?

El contar con un plan financiero personal ofrece beneficios en diferentes áreas de las personas y su familia a corto y largo plazo. Por ejemplo, se ha demostrado que al tener una buena salud financiera, las personas obtienen un estado de saludo óptimo, una mejor productividad en sus distintas actividades y una base sólida para cada etapa de la vida.

Sino planificamos y ejecutamos nuestro plan financiero, las consecuencias podrían ser devastadoras para las familias. Distintas investigaciones han encontrado que el tener dificultades financieras afectan a más personas que el tabaquismo y la obesidad. Mientras que el 20% de la población de EE.UU. fuma y el 30% son obesos, más del 70% están preocupados por sus finanzas. Según Elizabeth Scott, M.S., la ansiedad ocasionada por el estrés financiero, puede afectar negativamente su salud y productividad en varias formas, tales como: comer, beber y fumar más, y esto se debe a que no sabemos como enfrentar de una manera constructiva las tensiones financieras.

El estrés financiero ocasiona la pérdida de sueño, que puede dañar el sistema inmunológico y las habilidades cognitivas. Un sistema inmunológico disminuido puede llevar a la enfermedad y, paradójicamente, una disminución en las habilidades cognitivas pueden resultar en una mala toma de decisiones financieras. A consecuencia esta mala situación financiera nos reusamos a ir a consultar al médico, para no gastar más, acrecentando los pequeños problemas que luego llegan a convertirse en un problema mayor. El estrés invade a las personas afectando la vida diaria de las personas. Se aumentan las ausencias en el trabajo y la falta de concentración en las actividades que se realizan. El resultado en muchas familias de los E.E.U.U ha sido la bancarrota personal como medida mas drástica para salir del problema, pero que realmente no propone una verdadera solución al problema.

¿Qué hacer ante este problema?

En esta columna estaremos elaborando los pasos fundamentales para salir de esta enfermedad financiera que ha invadido los E.E.U.U. El objetivo de un plan financiero es de cambiar el comportamiento de cada uno de nosotros con respecto a nuestras finanzas. El camino hacia un cambio conductual no es una tarea sencilla. Si así lo fuera, la mayoría de los norteamericanos, dejarían de fumar, de comer comida chatarra, e iniciar ejercicio con regularidad. Por ello, un cambio conductual demanda una serie de información y de actividades en torno a la concientización, educación y cambios de comportamiento, para así alcanzar los resultados previstos.

El Primer Paso:
Debemos entender que hacer para atacar el problema de una manera holística, es decir, la deuda, el gasto, el presupuesto, el ahorro y los ingresos. Conocer nuestro estado actual es imprescindible, por lo tanto debemos de seguir un orden lógico para alcanzar nuestras metas. Un análisis de nuestras necesidades financieras es fundamental, seguido de un presupuesto detallado, Es importante saber cuáles son los gastos fijos y cuánto es el dinero que se tiene libre para poder determinar sus actividades. En este presupuesto debemos identificar que los gastos son los correctos y a su vez reorganizar algunos, ya que cuando el ingreso no es suficiente con nuestros gastos debemos cambiar nuestras conductas que vayan acorde a nuestra posibilidad.

Otro factor importantísimo en el presupuesto son los ingresos. La ecuación es bien sencilla ingresos menos gastos (de deuda y gastos diarios) puede reflejar un resultado positivo (que puede ser usado para ahorro o pago de deudas) o un saldo negativo, lo que indica que estoy gastando más de lo que genero por mi trabajo. ¿Que hacer? Como lo mencione anteriormente el primer paso es controlar mis gastos. El segundo es el de tratar de obtener más ingresos. Al revisar el presupuesto, debo también revisar la situación actual de empleo, tal vez pedir un aumento si así lo desea o ve conveniente por sus calificaciones, o buscar nuevas opciones de trabajo. Los importante es que ante la necesidad, la creatividad nos debe ayudar a buscar alternativas que anteriormente no habíamos pensado. Todos tenemos habilidades y destrezas que podemos emplear para generar un ingreso adicional que nos cambiaría de una manera positiva nuestras vidas.

Si deseamos cambiar nuestras vidas y lograr alcanzar nuestra libertad financiera es entonces importante que seamos cumplidos con nuestras obligaciones. Si somos responsables de nuestros gastos y del pago de nuestra deuda iremos mejorando nuestro perfil financiero ante las instituciones financieras y podremos obtener mejores beneficios a futuro.

Para poder llevar a cabo un plan financiero es importante también obtener mayor educación. Este elemento es importante para mejorar las finanzas personales. Adquiera un libro de economía, finanzas o de desarrollo personal. Contacte un asesor financiero que le ayude, puede también realizar cursos, obtener el ayuda de instituciones, etc. Todo esto, con la finalidad de mejorar las finanzas personales y lograr así alcanzar la libertad financiera. Feliz 2020!

The Real Meaning of Thanksgiving

Your-Financial-Freedom-Goals-Begin-with-a-Thankful.aspx

Today we celebrate Thanksgiving, one of the most appreciated national holidays. How did all start? The history traces back to the celebration in the year 1621 at Plymouth Plantation, where the Plymouth settlers held a harvest feast after a successful growing season. The United States Congress assembled, proclaimed “It being the indispensable duty of all nations, not only to offer up their prayers to Almighty God, the giver of all good, for His gracious assistance in a time of distress, but also in a solemn and public manner, to give Him praise for His goodness in general, and especially for great and signal interpositions of His Providence in their behalf; therefore, the United States in Congress assembled, taking into their consideration the many instances of Divine goodness to these States.”

Since the first year I moved to the United States 20 years ago, this celebration has been one of my favorites. It combines the act of giving thanks to God for all the things he has provided for us, as stated in the US Proclamation, and gives us all a moment to gather with our families to celebrate this important event. Back in Wisconsin, I remember that I would gather with friends for the huge feast, and what I admired the most, aside from the good and hearty food, was that everybody was sitting together. Whether it was while enjoying a table game or around the TV to see the BIG game of the day, we were all setting aside time to spend it together. Years later, as Venezuelans, my family and I have adopted this festivity by incorporating our Venezuelan traditions, however, always keeping in mind the real reason of Thanksgiving. In retrospect, as I ponder the origin of this holiday and what is happening now, I realize that we, as a population, have definitely deviated from the original purpose of the Thanksgiving celebration. And even more from the motive behind the Proclamation in 1782.

While most of us will spend Thanksgiving sitting down to a splendid dinner in the company of our loved ones, others will be at home and won’t be able to afford that sumptuous meal. Mainly due to the reason being that they are paid so poorly and have to depend on public assistance. On there other hand, there is also that group of workers who will spend their Thursday re-stocking shelves and working the shop floors to make sure everything is perfect for the shoppers. Nowadays, many companies have decided to get a jumpstart on Black Friday by shifting this beautiful national holiday into Black Thursday.

These days it seems like the kids will have to entertain themselves as the ladies in their family head to the malls after dinner while the guys probably spend their time in front of the TV watching the football game. Other families will even make it an event to camp out in front the nearest Best Buy just to get that flat screen TV or new PSP a few days before black Friday and completely skip out on the Thanksgiving dinner. It amazes me how despite the frustration of families struggling due to the weak job market and economic issues, according to the National Retail Federation, the average US family will spend $804 on gifts this holiday season, an increase of an increase of 33.55% from last year ($602 billion).

Thanksgiving is the start of a season of giving. When did we start deviating from that purpose? We should be thankful for all we have instead of being greedy for more. We should maintain our values and make sure that they remain intact. I am beyond thankful for my loving spouse and children, family and friends and more importantly for the chance to make a meaning in others lives.

God bless you all, and have a Happy Thanksgiving!!

Is The Obama’s MyRA Plan the Panacea of the Retirement Issue?

One of the most intriguing ideas in the State of the Union was Obama’s promise to use executive action to create a new middle-class savings vehicle that he calls a “myRA”. Obama explicitly said “Let’s do more to help Americans save for retirement. Today most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401(k)s. That’s why tomorrow I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a — it’s a new savings bond that encourages folks to build a nest egg.”

Is this new program the Panacea of the problem? The reality nowadays is that about half of all American workers are employed by companies that do not offer retirement plans (Brookings Institution report, 2009). In addition, those who are saving up for retirement are not saving enough. About two-thirds of all workers said they put some money away in 2013 for retirement savings, according to a survey by the Employee Benefit Research Institute. More than half of workers said they had less than $25,000 in savings (outside of their home and pensions). And 28% of workers said they had less than $1,000 in savings. These statistics are shocking, especially when we are referring to the US, the most developed country of the world.

The creation of myRA “A Safe, Easy-to-Use Starter Savings Account” is meant to Help Millions of Middle Class Americans Save for Retirement. This savings account would be offered through a familiar Roth IRA Account and, like savings bonds, would be backed by the U.S. government.
However, is MyRA better than IRA or 401(k) accounts? So far there is not enough information to thoroughly prove this. But technically, these plans are going to fall under the rules for a Roth IRA, which means you’ll end up paying tax on your contributions before you even get to deposit the money into your MyRA. That means you’ll lose the tax advantage of a traditional IRA. The original idea behind those tax rules was to let you shield income from the IRS during your peak earning years, and then, pay tax when you withdraw the money in retirement. Often at a lower rate because your income is lower. Another important aspect to consider is that while investors’ principals will be protected, the investment gains are expected to be low. Assuming an annual return of 1.5%, it would take someone who contributes $50 every two weeks nearly 11 years to amass $15,000. Thus, you will not be able to get the tax break with a MyRA nor the interest that will help you to accumulate the necessary amount for your retirement.

The first step to financial success is to pay yourself first. That means that saving is just the first step towards a secure retirement. However, when it comes to money, studies have shown that habits are more important than math. Once you’ve been investing an extra amount a month for 12 months, it will become a habit. Financial discipline will help you assess your goals and consequences when faced with a decision that could potentially take you off the plan.
You will automatically continue investing that extra amount without any encouragement from anybody including the government.

A study conducted for the period of 2008 to 2009 about the stock market decline showed that those workers who continued making regular contributions to their 401(k)s had a 65% increase in their 401(k) balances two years later. However, those who stopped their contribution during the downturn had only 26% increase. Therefore, workers must have a place to invest in their hard-earned savings that provides an appropriate balance of risk and return. Nowadays, with the exception of one company, many private sector providers do not offer retirement savings options tailored to smaller balance savers. Our government, rather than creating new financial figures that make us believe it is the panacea that will cure this illness, should dedicate the resources and efforts to provide the necessary education that will encourage Americans to begin building a healthy retirement plan that they will benefit from in the future! And all in all, change their lives for the better!

I have a Dream

On August 28, 1963, Martin Luther King delivered his most famous speech that is still remembered by millions of people, not only in the US, but also the rest of the world.  Beginning with a reference to the Emancipation Proclamation, which freed millions of slaves in 1863, King observes that: “one hundred years later, the Negro still is not free.”

With his famous speech MLK shaped modern America and gave a vision of freedom and equality among all Americans. Fifty years later, I would like to quote MLK in saying that “I have a dream,” a dream of finding financial freedom in the families of Laredo, South Texas, Texas and the US.
When it comes to household income and household wealth, the gaps between Blacks, Hispanics and Whites have widened. The income disparity, in fact, is growing.  In 2011 the median household wealth (comprising cash, investments, homes, cars and other assets) for America’s White families was $110,500. For Blacks it was $6,314 (Hispanics were similarly badly off). A separate study by the Urban Institute found that between 2004 and 2010 Blacks and Hispanics lost 23% of their average wealth, while Whites lost 1%.

As we reflect back on the words of MLK, there still remains a lot of work to ensure that everyone who works hard can succeed, regardless of race, gender, etc. Currently, our role as financial advisers is in demand, and even more importantly, we need to spread the word about this business opportunity! I HAVE A DREAM, a DREAM in which TOGETHER we will change paradigms and find FINANCIAL FREEDOM.

Let’s accomplish this DREAM TOGETHER!